Jump to content

Interest Rates


Recommended Posts

True, but until it happened, the telegrams had always been considered economists' speculation.

And we all know how accurate economists' speculations usually are... :devilsmiley::hypocrite:


I haven't perused every detail of Bloomberg's clever "Fed Eve" predictions:


This time, somebody got at least the presentation right.

Link to comment
Share on other sites

  • Replies 91
  • Created
  • Last Reply

Top Posters In This Topic

So much for funnymentals
... other factors at work (and too much money sloshing around)




Investors digested the impact of the BOJ's actions, and asked: Is that it? The enhancements to asset purchases were judged to offer very little in the way of extra stimulus. Some also said the moves showed human traders won over algorithm-based robots, saying the computers had been set up to react to any mention of expansion.


"Don't get me wrong, algos can help move quickly on headlines, but they're sometimes bad at interpreting fundamental facts," said Simon Pianfetti, a senior manager at the market solutions department at SMBC Trust Bank Ltd. in Tokyo. "I waited until the market calmed down. As soon as the details were clear, the market retraced quite a lot."

Link to comment
Share on other sites

  • 8 months later...

Interest Rates (RBA cash rate is now 1.50%)


"We haven't seen interest rates be influential for some time now"

- Peter Birtles, CEO, Super Retail Group


"Recent rate cuts might have had some impact but I don't think we've seen the same impact that we might have when interest rates were higher"

- Richard Goyder, CEO, Wesfarmers


"If consumers get a little nervous when rates are so low they may start wondering about the strength of the economy"

- Hilton Brett, CEO, RCG Corporation


"Nobody cares [about lower interest rates]. It's like an ant on a log who's been given a steering wheel going down a river. The log is just taking him down river"

- Mike Kane, CEO, Boral

Link to comment
Share on other sites

  • 1 month later...

Headline consumer prices rose faster than expected thanks to a surge in fruit and vegetables, triggering a rise in the Australian dollar as traders all but wiped out bets on future interest rate cuts.


The consumer price index rose 0.7 per cent in the September quarter after increasing 0.4 per cent in the previous quarter, the Australian Bureau of Statistics said on Wednesday.


The annual CPI rate quickened to 1.3 per cent from 1 per cent.

Link to comment
Share on other sites

  • 10 months later...

and in breaking news, RBA holds rates steady


Key Quotes

  • "The recent data have been consistent with the bank's expectation that growth in the Australian economy will gradually pick up over the coming year," Governor Philip Lowe and his board said after leaving the cash rate at 1.5 percent Tuesday, as expected by markets and economists. "The outlook for non-mining investment has improved recently and reported business conditions are at a high level."
  • "Housing prices have been rising briskly in some markets, although there are signs that conditions are easing, especially in Sydney," Lowe said in the statement. "Residential construction activity remains at a high level, but little further growth is expected."
  • "Wage growth remains low," he said. "This is likely to continue for a while yet, although stronger conditions in the labor market should see some lift in wages growth over time."
Link to comment
Share on other sites

Move on, nothing to see here. Interest rates are not going anywhere soon.


The Reserve Bank board has kept its cash rate on hold at a record low of 1.5% for the 13th consecutive month, amid a host of signs that the economy is picking up. Car sales data for August showed yet another rise as sales of commercial vehicles picked up strongly.


"The low level of interest rates is continuing to support the Australian economy. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time,ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ Governor Phillip Lowe concluded his usual post meeting statement with an unchanged outlook.


Figures out yesterday on the trade accounts (via the current account data for the quarter) and government finances) showed stronger than forecast growth - offsetting the weak data on company profits and business inventories the day before.


For that reason some economists are saying the June quarter GDP figures later today could show quarter on quarter growth of 0.7% and 1%.


ThatÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s despite a 6% slide in the terms of trade in the June quarter, which will negatively impact national income.


The post meeting statement from Governor Lowe was more upbeat than previous missives have been. The RBA seems to be more confident the economy is doing better than previously thought. The statement was more direct and less qualified.


"The recent data have been consistent with the BankÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s expectation that growth in the Australian economy will gradually pick up over the coming year. The decline in mining investment will soon run its course. The outlook for non-mining investment has improved recently and reported business conditions are at a high level.


"Residential construction activity remains at a high level, but little further growth is expected. Retail sales have picked up recently, although slow growth in real wages and high levels of household debt are likely to constrain future growth in spending.


"Employment growth has been stronger over recent months and has increased in all states. The various forward-looking indicators point to solid growth in employment over the period ahead. The unemployment rate is expected to decline a little over the next couple of years.ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ÂÂ


The news had no impact on the value of the Aussie dollar - despite post meeting statement pointing to the difficulties the rising currency posed for the Australian economic recovery.


Wage growth remains low. This is likely to continue for a while yet, although stronger conditions in the labour market should see some lift in wages growth over time. Inflation also remains low and is expected to pick up gradually as the economy strengthens.


"The Australian dollar has appreciated over recent months, partly reflecting a lower US dollar. The higher exchange rate is expected to contribute to the subdued price pressures in the economy. It is also weighing on the outlook for output and employment. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ÂÂ


Car industry sales figures for August showed a better than expected outcome with a record figure for the month. It was the 4th monthly increase in a row.


The August result of 96,662 was 1.8% more than for the same month last year and continues the industryÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s steady growth year to date, with a 0.6 per cent increase over the first eight months of 2016.


Industry sales over the eight months to the end of August totalled 788,968, compared with 784,380 for the same period in 2016.


Comparing the August outcome with that of the corresponding month in 2016, sales of small SUVs grew significantly by nearly 23%, and medium SUVs by 14% Light passenger cars also showed firm growth with a 7% rise.


Light commercial vehicles were also strong contributors to the August total. Sales of pick-up and cab-chassis 4X4s (favoured by business and small tradies) jumped 23% over the same month last year, and two-wheel drive models increased by 2.7%.


Every state and territory except Tasmania saw increased sales over August 2016. The ACT showed the strongest growth at 9.4%, followed by Western Australia with a 4.2% increase, Queensland (+3.5%), Northern Territory (+2.6%), Victoria (+1.7), NSW (+1.1%) and South Australia (+0.1%). WA and Queensland were the states most impacted by the mining downturn with demand dropping sharply in both states in the past year or more.



i agree. aussie rate won't move any time soon. if there is a move ---the direction would be up {time at late next year} imho



Link to comment
Share on other sites

  • 2 months later...

Meantime, we saw "the race that stops a nation" thinking about other matters; this first Tuesday of every month had the RBA leave monetary policy on hold (as they have since August 2016); the widely expected decision comes after mixed signals on the domestic economy in recent weeks.

Retail sales and consumer price data disappointed, but surveys of consumer and business confidence improved and employment and international trade data exceeded expectations.


At the same time, US economic growth and manufacturing data have beaten expectations, the IMF revised up its global economic growth forecast, the Australian dollar has fallen 2 per cent, crude oil has jumped 14 per cent, copper is up 7 per cent and nickel has surged 25 per cent.

Link to comment
Share on other sites

  • 1 month later...
Inside the bond markets a hugely significant event may have been underplayed in recent days: Australian two-year government bonds now pay less than US bonds for the first time in 17 years.


Put simply, this puts pressure on the RBA to lift rates even if the economy remains ridden with pockets of weakness, especially softer residential property prices and low consumer spending.


A lift in Australian official interest rates that does not correspond with wage growth would deepen the weakness in house prices, extend the malaise in consumer spending and further depress the retail sector already feeling the heat of the arrival of Amazon

Link to comment
Share on other sites

Why would this interest rate inversion put pressure on the the Reserve Bank to put up official interest rates? Clearly the AUD is holding its own in the mid 70's. Given how uncompetitive Australian manufacturing has become and how distorted our economy has become, we really are a land of holes and houses, we could probably do with a prolonged period when the Aussie was in the 60's or even 50's.


And just for some perspective 17 years ago the Aussie was bumping along in the low 50's.


And yes Australian banks are highly relient on offshore borrowing but the interest rates they are charged are set independently on what government bonds are paying.


Also I totally reject that Australia is currently cursed with a "weakness in house prices". Bloody hell, historically and relative to other markets Australia has pathologically strong house prices. The whole system needs a good dose of epsom salts to rebalance the amount of lending going into the housing market and that going into business.


Out of interest nip, who wrote that piece?

Link to comment
Share on other sites

hi triage


James Kirby; Market outlook for 2018 bright, but risks still lurk http://www.theaustralian.com.au/business/w...abe68bfdf967773


you raise a lot of questions. I think he is opining along the Standard Narrative, which usually allows the writer some wriggle room.


(As an importer of capital, the nation needs to be an attractive destination for these flows, and the argument can take the lines as portrayed. Some of the flow-on assumptions are coincidental, rather than correlative - let alone causative - I agree)






Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Create New...