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Interest Rates, Local interest rate discussions
nipper
post Posted: Nov 6 2018, 01:32 PM
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no change --- 1.5%pa
QUOTE
The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual. Taking account of the available information, the [RBA] 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.




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
early birds
post Posted: Jul 4 2018, 10:08 AM
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In Reply To: nipper's post @ Jul 3 2018, 10:47 PM

No change from the Reserve Bank at its July meeting with the cash rate remaining on hold at 1.50% and likely to do so for the next year at least, if current economic trends continue, particularly weak wage growth.

Wages growth remains low. This is likely to continue for a while yet, although the stronger economy should see some lift in wages growth over time,” Governor Phil Lowe said in his post meeting statement.

“Consistent with this, the rate of wages growth appears to have troughed and there are increasing reports of skills shortages in some areas.

"Inflation is low and is likely to remain so for some time, reflecting low growth in labour costs and strong competition in retailing. A gradual pick-up in inflation is, however, expected as the economy strengthens. The central forecast is for CPI inflation to be a bit above 2 per cent in 2018.”

"The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual,“ Dr Low said.

So no need to lift interest rates, as some sections of the media and the economic commintariat have been urging.

The AMP’s chief economist, Dr Shane Oliver, who has been a ‘dove’ on monetary policy made the point that he saw “nothing in the RBA’s latest Statement to suggest an imminent change in monetary policy."

“While a brightening outlook for mining investment, strengthening non-mining investment, booming infrastructure spending and strong growth in export volumes argue against a rate cut, topping dwelling investment, uncertainty around the consumer, continuing weak wages growth and inflation, falling home prices in Sydney and Melbourne, tightening bank lending standards and the threat to global growth from a US driven trade war all argue against a hike.

"So it makes sense for the RBA to remain on hold.

"We remain of the view that an RBA rate hike is unlikely before 2020 at the earliest. And given the weakness in home prices and the negative wealth effect that will flow from that its premature to rule out the next move in official rates being a cut, he added.

He and some other analysts have noted that money market rates have risen, mainly due to the rise in US rates for our banks borrowing in US dollars. That is forcing some banks to lift some mortgage rates. Dr Oliver says that’s a concern.

“The RBA also appears to be a little more perplexed by the rise in money market rates seen in recent months seeing at as driven by “other factors” than just the US and unclear as to how long it will persist.

“The problem is that it is resulting in higher mortgage rates for some borrowers (with the big banks likely to move too) at a time when the property market is already weak and its harder to get a loan.

“If the rise in money market funding rates proves to be structural (due to say regulatory changes) then its another reason for the RBA to be cautious in raising interest rates and would point to the need for easier RBA policy over time than would otherwise be the case."
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i reckon if AUD keeps current rate and even drifting lower from here then inflation will be up-------if RBA not "cooking the states" of course.




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nipper
post Posted: Jul 3 2018, 10:47 PM
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QUOTE
Reserve Bank has extended holding interest rates at the emergency low of 1.5 per cent for a record 21st meeting.

The RBA has not changed its setting since August 2016 when the cash rate was cut to its current record low.

The decision was entirely in keeping with expectations which have seen market forecasts of a rate hike pushed further into the future....
... 2019 ????



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Feb 6 2018, 04:55 PM
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and, incidentally,
QUOTE
The Reserve Bank of Australia has left interest rates unchanged at a record low of 1.5 per cent. The widely-expected decision comes after mixed signals on the domestic economy over recent weeks.

Business confidence and conditions remained solid along with employment growth but inflation stayed below target, unemployment rose from a five-year low, retail sales dived after a surprising jump, building approvals fell sharply and home prices in Sydney and Melbourne dipped.

At the same time, manufacturing data and other economic indicators in the US, China and Europe have mostly beaten expectations. Commodity prices have generally been strong along with the Australian dollar and the sharemarket, but they have suffered from global risk aversion in the past week following a rise in global bond yields and expectations of faster US interest rate hikes.

The RBA has left monetary policy on hold since cutting the benchmark rate to 1.5 per cent in August 2016




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: early birds  
 
nipper
post Posted: Dec 9 2017, 07:33 AM
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In Reply To: triage's post @ Dec 9 2017, 07:07 AM

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)








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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: triage  early birds  
 
triage
post Posted: Dec 9 2017, 07:07 AM
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In Reply To: nipper's post @ Dec 9 2017, 05:46 AM

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?



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nipper
post Posted: Dec 9 2017, 05:46 AM
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QUOTE
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




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Nov 7 2017, 04:04 PM
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In Reply To: early birds's post @ Sep 6 2017, 10:58 AM

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.
QUOTE
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.




--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
early birds
post Posted: Sep 6 2017, 10:58 AM
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In Reply To: nipper's post @ Sep 5 2017, 10:49 PM

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,” 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%.

That’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 Bank’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.”

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.”

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 industry’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.
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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



 
nipper
post Posted: Sep 5 2017, 10:49 PM
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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."




--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: early birds  
 
 


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