isn't that how Macquarie justify their "come as you are served" rates?
What will interest rates peak at this time ?
- Thread starter keithj
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Today the RBA gave a speech about Bank Funding.
Their concluding paragraphs intimated that their neutral band had been reached, which implies that there may be a pause in IR rises.....
... followed with the disclaimer that this could change if other things change
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Their concluding paragraphs intimated that their neutral band had been reached, which implies that there may be a pause in IR rises.....
... followed with the disclaimer that this could change if other things change
.Today the RBA gave a speech about Bank Funding.
Their concluding paragraphs intimated that their neutral band had been reached, which implies that there may be a pause in IR rises.....
... followed with the disclaimer that this could change if other things change
Goldman Sachs agrees with this (for what its worth, but out of all the institutions their views are most sought after and hardest to obtain).
Also mentioned something about the RBA not wishing at this stage to move into a neutral setting but rather a less accomodative one.
and may consider dropping them beause they are not actually sure where anything is headed anymore...
http://www.businessspectator.com.au...rest-rates-econ-pd20091215-YR7RP?OpenDocument
"That last phrase says, in effect, that the increase gives the RBA more flexibility, if necessary, to decrease rates in future. That’s an admission of the bank’s lack of absolute confidence in its understanding of the outlook that wasn’t apparent at its previous board meeting and that wasn’t referred to in Glenn Stevens’ statement the day the rate was last increased. "
http://www.businessspectator.com.au...rest-rates-econ-pd20091215-YR7RP?OpenDocument
"That last phrase says, in effect, that the increase gives the RBA more flexibility, if necessary, to decrease rates in future. That’s an admission of the bank’s lack of absolute confidence in its understanding of the outlook that wasn’t apparent at its previous board meeting and that wasn’t referred to in Glenn Stevens’ statement the day the rate was last increased. "
http://kineticsglobal.com/economist/sites/default/files/PriceActionRBAJumpedGun161209.pdf
GDP too soft for current cash rate - i call either
a) mistake in raising or
b) mistake in raising or
c) mismanagement or
d) shot across the bow (political stunt) or
e) mistake in raising.
GDP too soft for current cash rate - i call either
a) mistake in raising or
b) mistake in raising or
c) mismanagement or
d) shot across the bow (political stunt) or
e) mistake in raising.
http://www.news.com.au/business/bre...ar-lower-at-noon/story-e6frfkur-1225810994336
Market reaction to a pause in rate rises
Peter
Market reaction to a pause in rate rises
Peter
Around Christmas...I would have thought so. Interesting over the next quarter to see how sales go.
These rates are not what I would have called normal. Hm-m.
Regards JO
Each downturn the neutral rate lowers.
Personally, this has been my prediction for some time.
That the economic recovery was very much stimulus and postive hope. Real growth was hard to see. New houses only provide 6 months of work. New cars only three months. Second half of 2009 would be worst than the first half.
2010 will be flat and long. I would say no RBA rate rises until June and possibly 2011. The banks will squeeze another 0.2%.
The RBA was playing possum wth banks so they would think more rises were coming and they could fatten up the margin then. They want FHO not to go crazy and buy $$$$ with $ in the bank.
2011 will be very very interesting year.
Peter
Personally, this has been my prediction for some time.
That the economic recovery was very much stimulus and postive hope. Real growth was hard to see. New houses only provide 6 months of work. New cars only three months. Second half of 2009 would be worst than the first half.
2010 will be flat and long. I would say no RBA rate rises until June and possibly 2011. The banks will squeeze another 0.2%.
The RBA was playing possum wth banks so they would think more rises were coming and they could fatten up the margin then. They want FHO not to go crazy and buy $$$$ with $ in the bank.
2011 will be very very interesting year.
Peter
For sure Peter - 2011 will either be boom or bust.
and my view is shifting from bull to knife-edge.
and my view is shifting from bull to knife-edge.
why is that BC? I thought you of all people, positioned in th emiddle of the resources and property development boon, would be a bull
I fully understand your shifting views, its still too uncertain to call.
The next 6 months (up to mid 2010) could provide a false sense of security.
I pay alot of attention to inventory cycles as these provides a glimpse into the near term future.
From early 2008 to mid 2009 there was a massive ramp down of inventories as companies didnt want to hold excess stock during times of such uncertainty. The lag between purchases and demand (with demand falling faster than purchases could be cut) ment that inventory levels were constantly being cut. This has a follow through the manufacturing process.
With demand stabalising/rising the next 6 months should show a strong rebound in inventory building as inventories are now at 'minimal' levels. This is being shown in the forward looking indicators (such as the Chicargo PMI which just posted a higher than expected reading for December).
This implies that quarterly company profit figures should stack up well for the next 6 months especially when compared with QoQ comparisons.
The headache starts after the next 6 months.
Markets are expecting very decent earnings increases post 2010. Current market valuations in the equities market are based on this assumption (ie PE ratio's based on current profits are expensive, but on forecast 2011 earnings are reasonable so long as that earnings growth does in fact come through into 2011)
My concern is two fold:
Firstly the negative consequences of the GFC was 'smoothed' by central banks flushing the system with cash and increased government borrowing.
This was the correct action to take otherwise the world might have seen another true great depression. But i feel the consequence of this is lower future economic growth as the world has to work through the consequences of this 'smoothing' (ie we have taken from the future to reduce the impact on today).
Secondly we have not found a catalyst to substitute for the era of cheap and easy debt to stimulate demand in the developed world. This catalyst must be found before we will see a sustained period of reasonable global economic growth (and not just tempory growth as will be seen in the next 6 months due to inventory rebalancing after a severe recession).
Great Post.
Aside from all the theory or study it is really simple stuff.
A tree hold 20 apples, you pick 5 now, you are satisfied, you have 15 for later, you pick 15 now, you are full and then you are hungrey later.
Car, house, equipment, insulation, solar sales, school halls have all been brought forward on borrowed money. Gov will tax to pay that back.
Costello was right when he said % rates was better stimulus than handouts. They dont cost anything in simple terms. Easy to adjust.
Where is the return on a 1000 school halls and when you read this, it makes you depressed.
http://www.smh.com.au/national/depa...of-school-hall-say-parents-20091229-lirb.html
Peter
Aside from all the theory or study it is really simple stuff.
A tree hold 20 apples, you pick 5 now, you are satisfied, you have 15 for later, you pick 15 now, you are full and then you are hungrey later.
Car, house, equipment, insulation, solar sales, school halls have all been brought forward on borrowed money. Gov will tax to pay that back.
Costello was right when he said % rates was better stimulus than handouts. They dont cost anything in simple terms. Easy to adjust.
Where is the return on a 1000 school halls and when you read this, it makes you depressed.
http://www.smh.com.au/national/depa...of-school-hall-say-parents-20091229-lirb.html
Peter
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