What the Reserve will do Tuesday

[Rolf Latham]

25 on tuesday, with an end of year cash rate for 2011 of 5.25

I think we will see some more lenders break lock step so they can maintain margins

ta
rolf

 

[house sale]

Two years ago I think these were the most fun threads you could get, everyone putting a bet on what the Reserve Bank was going to do each month.

QUOTE]
I can't see the fun in it now

 

[Bigtone]

the odds for the .25% increase has now drifted to to $1.48 which is double the odds available earlier in the week

 

[Perth Investor]

QUOTE]
I can't see the fun in it now [/QUOTE]

Fair point. But in the gloom comes the opportunity

 

[Ausprop]

QUOTE]
I can't see the fun in it now

Fair point. But in the gloom comes the opportunity[/QUOTE]

is it gloom or is it just reality bites?

 

[joeExpat]

why is it IRs in this country seem to be permanently too high?

Not too high over the last couple of years... too low - causing an unsustainable property bubble that will unfortunately burn a lot of people when rates return to normal. Australia doesn't need any low rate stimulus, & people with savings will welcome a return to higher rates.

 

[RickF]

The banks will be hoping for a 0.25 increase so they can sneak in their own bit on top. Rates being close to 5% is what the RBA is aiming for and if they can get in early with one or two increases now they may not have to hit us so hard next year.

 

[truong]

if they can get in early with one or two increases now they may not have to hit us so hard next year.

Agreed. An early strike is worth two late ones. Take the pain now.

 

[Andrew_A]

Rate expectations down to a 50% chance of an increase as of yesterday, perhaps connected with the ABS building approval numbers which are still trending down. Do they toss a coin if it's a 50/50?

 

[Aaron Sice]

^^^ prob a more reliable indicator.

 

[MichaelW]

They'll wait until October.

No change.

Housing finance commitments were too weak so they'll wait for the inflation reading first and likely move up by 25bp in October.

Either way, I just fixed a tad over $1M of my loans at 6.99% for three years. I think that will prove a good call over that period.

Cheers,
Michael

 

[Bigtone]

odds of .25% increase now $1.60 (blowing like the north wind)

 

[sash]

I did not look at the tracker rate or Sportsbet!

However, I did put my money where my mouth is....an hour ago I fixed one of my loans due to expire on 9 Oct 2010 at 6.84% for 1 year! I am of the opinion we will see rates headback down late next year.

Unfortunately, a large portion of my loans...approximately 65% are fixed at between 5.24% and 5.74% and will come off these rates from April onwards.

I suspect at that point I will be paying about a 7% variable rate but will hold till I see movement downwards in fixed rates. As I mentioned previously this time around rent increases are bit harder to get, never the less I have put of rents to cover most of interest rate increase. The remaining amount will come from my strategy of retiring debt at about 10k per month.

My feeling is that we will not see an 8% std variable rate as the level of indebtness in this country is high!

Well the target rate tracker is saying 64% chance of a .25% increase as of the 29th.

That's intriguing; our poll is sitting at 65%, so that says something.

Sportsbet has it at $1.25, so I guess they're saying an 80% chance like Sash.

 

[Ed Barton]

They'll wait until October.

No change.

Housing finance commitments were too weak so they'll wait for the inflation reading first and likely move up by 25bp in October.

Either way, I just fixed a tad over $1M of my loans at 6.99% for three years. I think that will prove a good call over that period.

Cheers,
Michael

we're talking October. do you mean November?

i think up 25 next week and possibly another 25bp in December. if we get two raises in the rest of this year then a holiday till April. if we only only get one then maybe another 25 rise in feb.

 

[bene313]

why is it IRs in this country seem to be permanently too high?

Do you think inflation in this country is permanently too low?

 

[kero]

no change for me. I am hearing interest rates are low comparatively... but low to who? business owners? mortgage holders? credit card holders? the banks have their extra bit added to a RBA upward movement... so the actual or effective interest rates are not low.

the question is really how greedy are the banks? share the pain with people with loans or act on the 'interest of their shareholders' and give themselves more revenue. the banks are milking those with loans. the possibility of them to increase rates independent of the RBA's is high. and the sad thing is the government can do nothing about it.

 

[PeterC]

They'll wait until October.

No change.

12 months is a long time without a change

my bet is +0.25, although i also wouldnt be surprised if they dont move till they have inflation figures at end of month

 

[jingo]

I wouldn't be surprised if the reserve moved up .25 and some banks up another .20 on top of this on Tuesday.

Regards Jason.

 

[intrigued]

the question is really how greedy are the banks? share the pain with people with loans or act on the 'interest of their shareholders' and give themselves more revenue. the banks are milking those with loans.

Derrrrrrrrrrr

I wonder why.

 

[Deltaberry]

Based on the following....I am 80% sure that the RBA will pull the lever!

This is based on:

1. The low rate of unemployment and an emerging skills shortage

2. The dollar has hit US $0.95....this will make more attractive for Aussies to go overseas

3. Signs that inflation is heading up

4. Sydney and Melbourne markets have not cooled to the degree of SA, Qld, and WA

I don't understand why No. 2 would be a reason / consideration.

Are you saying the RBA is in some sort of allegiance with overseas countries and wants to encourage the Australian people to spend overseas? Very confused...