Interest Rate

Generali

inspector_monkfish wrote: »

have they?
i hadn't heard that.

i did hear that there was talk that they may hike soon, but RBA quelled that by keeping rates unchanged and stating that they were happy with low rates right now

From the last RBA statement on monetary policy:

Given the rapidly evolving financial and economic landscape globally, the outlook for the Australian economy continues to be subject to considerable uncertainty, although the risks are more balanced than they have been for some time. With confidence globally still fragile, it remains possible that the outlook could again weaken. On the other hand, with the cash rate at an unusually low level and the global economy stabilising, movement towards a more normal setting of monetary policy could be expected at some point if further signs of a durable recovery emerge. For the time being though, the Board’s judgment is that the present accommodative setting of monetary policy is appropriate given the economy’s circumstances. Over the period ahead, the Board will continue to monitor economic and financial conditions and how they affect prospects for a sustained recovery in the domestic economy, consistent with achieving the inflation target.

In a speech, the Governor of the RBA has said that inflation is a fear and the consensus amongst the newspaper writers is that rates will start to rise before Christmas and possibly even next month if the jobless figures are good next week (leading indicators such as the number of job ads in the papers have been strong).

The RBA has consistently described a cash rate of 3% as being an 'emergency level'.

inspector_monkfish

Generali wrote: »

From the last RBA statement on monetary policy:



In a speech, the Governor of the RBA has said that inflation is a fear and the consensus amongst the newspaper writers is that rates will start to rise before Christmas and possibly even next month if the jobless figures are good next week (leading indicators such as the number of job ads in the papers have been strong).

The RBA has consistently described a cash rate of 3% as being an 'emergency level'.

cheers
is that from 1st Sep statement?

Generali

inspector_monkfish wrote: »

cheers
is that from 1st Sep statement?

It was from the August statement (I think the statements are 1/4ly). The speech was Wed or Thurs of this week.

The SMH reckons markets (bond? money? doesn't say) has a 40% chance of a 25bp rate hike in October priced in amd a 100% chance by November.

http://business.smh.com.au/business/jobs-figures-may-sway-rba-20090904-fats.html

inspector_monkfish

Generali wrote: »

It was from the August statement (I think the statements are 1/4ly). The speech was Wed or Thurs of this week.

The SMH reckons markets (bond? money? doesn't say) has a 40% chance of a 25bp rate hike in October priced in amd a 100% chance by November.

http://business.smh.com.au/business/jobs-figures-may-sway-rba-20090904-fats.html

07:47 01Sep09 -WRAPUP 3-Australia central bank says low rates right for now
* RBA says rates OK, counters talk of imminent tightening
* Market still wagering on Nov hike, fully priced for Dec
* Q2 GDP forecasts trimmed back to slight 0.2 pct rise
* Upbeat building, manufacturing data positive for 2nd half


SYDNEY, Sept 1 - Australia's central bank on
Tuesday left interest rates steady at 3.0 percent as expected and
surprised some by saying this record low level was right for the
time being, countering talk of an imminent tightening.

The local dollar <AUD=> slipped and bill futures <0#YBA:>
rallied as investors scaled back the chance of the Reserve Bank
of Australia (RBA) moving as early as October, though markets
still showed a 66 percent chance of a hike to 3.25 percent in
November.

"It sounds like the RBA doesn't want to bang the drum about
rate hikes," said Rory Robertson, interest rate strategist at
Macquarie. "This is a much less hawkish statement than the
markets had anticipated."

Based on overnight indexed swaps one of the best
guides to market thinking on the cash rate, these was less than a
one-in-five chance of a move in October compared with 50 percent
before the announcement.
Some 20 basis points of tightening are priced in for
November, and 36 basis points for December.

Another measure from Credit Suisse shows the
market has already priced in a total of 175 basis points of
tightening in the next 12 months.

"The RBA is reasonably upbeat, both about the global and the
Australian economies and, in particular, about China," noted
Su-Lin Ong, a senior economist at RBC Capital Markets.
"All in all, this is not consistent with a cash rate of 3
percent, which clearly is an emergency setting."

Last month, RBA Governor Glenn Stevens noted he had cut rates
so low in anticipation of an economic rout that never happened,
so it was likely rates would have to rise at some stage.

In a brief statement after Tuesday's monthly policy meeting,
Stevens emphasised that the domestic economy had been
surprisingly strong and highlighted the improved outlook for
business investment.
"It now appears that investment may not be as weak over the
year ahead as earlier expected," said Stevens.

Home construction was picking up and, combined with fiscal
pump priming, should see the economy firm into 2010. That, in
turn, meant that inflation might not fall as first thought.

WARY ON Q2 GDP
The interest rate swap curves of most major currencies
steepened earlier this year in anticipation of a prolonged period
of low rates, but the shorter end of the Aussie dollar curve has
now become flatter than those in U.S. dollars or euros, implying
a rate rise is more imminent in Australia.

"The RBA has upgraded their medium-term view a notch, but
certainly not enough to suggest that they will pull the trigger
on rates in October," said Spiros Papadopoulos, an economist at
National Australia Bank.
"Today's Statement was about reaffirming that the next move
is up, but not until a durable recovery is seen."

The RBA may have had a wary eye on the government's report on
gross domestic product (GDP) for the second quarter, due on
Wednesday.

Hopes had been high for a solid pick-up in growth led by
consumption and business investment, but unexpected drags from
international trade and inventories undercut that.

A Reuters poll of 18 analysts taken on Tuesday gave a median
forecast of just 0.2 percent growth last quarter, down from an
initial estimate of 0.6 percent and actual growth of 0.4 percent
in the first quarter. [AU/ECI]
Still, the outlook for the rest of the year was supported by
upbeat data on new home approvals and manufacturing on Tuesday.

Approvals to build new homes jumped 7.7 percent in July, on
top of a 9.9 percent surge in June, as low mortgage rates and
government grants to first-home buyers fuelled demand.

And the Australian Industry Group/PriceWaterhouseCoopers
Performance of Manufacturing Index (PMI) jumped 7.2 points to
51.7 August.

That was above the 50 threshold separating growth from
contraction, a major turnaround for a sector that accounts for
about a tenth of Australia's A$1 trillion-economy.

"All of which tells you that economic policy is working in
Australia and we have been able to defy all those predictions of
our imminent economic death," said Michael Blythe, chief
economist at Commonwealth Bank.

"The risks have shifted in the direction of the RBA moving
sooner," he added. "But we believe that there is enough
uncertainty in the outlook and enough disinflationary forces at
work to favour a cautious approach."

Euphoria1z

if the base rate remains unchanged, and if your on a svr (which i am) then can my mortgage lender increase the svr before the base rate increases or can they only increase the svr when the base rate increases?

ta.

inspector_monkfish

Euphoria1z wrote: »

if the base rate remains unchanged, and if your on a svr (which i am) then can my mortgage lender increase the svr before the base rate increases or can they only increase the svr when the base rate increases?

ta.

as far as i am aware, the svr is their own rate, and although closely linked to boe rate, they are free to do with it whatever they like....

Generali

inspector_monkfish wrote: »

as far as i am aware, the svr is their own rate, and although closely linked to boe rate, they are free to do with it whatever they like....

That's my belief too.