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Got Interest Rate thread

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The economy still can't be tooooo good. If they keep interest rates on hold.

Remember when we were first disturbed that interest rates were going down. It meant an economy in trouble.

How long have we had historical record low interest rates?

Why the hell, can't anyone admit we are in the toilet.

 

The truth is, we have 2.0 bps left when the next little bit of trouble hits.

Of course, we will have climbed out of the hole by then - maybe 20 years down the track.

HA!!

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The economy still can't be tooooo good. If they keep interest rates on hold.

Remember when we were first disturbed that interest rates were going down. It meant an economy in trouble.

How long have we had historical record low interest rates?

Why the hell, can't anyone admit we are in the toilet.

 

The truth is, we have 2.0 bps left when the next little bit of trouble hits.

Of course, we will have climbed out of the hole by then - maybe 20 years down the track.

HA!!

... and low interest rates means a substantial sector of the economy that depends on interest income has lost purchasing power which further depresses the economy whilst  artificially distorting other areas into bubbles.

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The 90 day yields are now higher than two rate cuts ago, yet we've had not official rate rise.

Unless they are complete idiots they'll need to start raising - particularly if the Fed is raising as forecast next year.

 

If rates are lower than in the USA then you're looking at sub 0.50 IMO.

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Unless they are complete idiots they'll need to start raising - particularly if the Fed is raising as forecast next year.

 

If rates are lower than in the USA then you're looking at sub 0.50 IMO.

Could you imagine what that would look like from the car dealership?    That Buick (err "holeden") or Toyot-ha just became 25% more expensive.

 

The fellas at Macrobusiness are calling ~60's but the AUD is a stubborn one...rising, resisting, hanging on.   Interesting to see CAD fall away from AUD, for the longest time they were in lockstep but I assume now that oil is out of the game the AUD powered by Big Coal will be unstoppable?

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Australia doesn't have much going for it except for commodities, so I can't see the AUD bubbling up until commodity prices pick... which could be a while.

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Gold is one of Australias things though yeah? If things get truly screwed gold will go up and hence the aussie gold miners, probably not enough to matter unless the gold to the moon guys are right.

 

(I have chosen EU billing for my health insurance as I figure that is the one to go down comparative to all the other currencies I work in, weirdly enough it saved me US$200 on the initial quote anyway)

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The 90 day yields are now higher than two rate cuts ago, yet we've had not official rate rise.

 

Now going down with our Lord & Saviour!

post-148-0-89382600-1452499221_thumb.jpg

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gold in aud is clawing back up as the dollar  folds,. i had to part with an oz, to grab a newer car a coupla weeks ago, 1460 i got now its 1560 or so,   will i ever get that oz back?

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The Reserve Bank of Australia, disinflation, and the race to zero interest rates

 

 

If global interest rates went and jumped off a cliff, would the Reserve Bank of Australia (RBA) follow suit? Until recently, many would have argued no, the RBA was no lemming.

 
Unemployment is steady, growth numbers have been strong and the economy is slowly but surely shifting away from the mining investment boom.
 
But shocking inflation figures prompted the RBA to cut interest rates a quarter percentage point last week and the move has prompted most economists to predict a further rate cut this year; they say August looks "very live".
 
Six of the seven economists surveyed by Fairfax Media expect the central bank to cut rates to 1.5 per cent this year, one remains unchanged and several are teetering on the edge of suggesting there may indeed be two further cuts in 2016.
 
 Some economists are tipping that Reserve Bank of Australia governor Glenn Stevens will cut rates once more in August, ...
Some economists are tipping that Reserve Bank of Australia governor Glenn Stevens will cut rates once more in August, before handing the reins over to his successor, Philip Lowe.
But how much much lower will the RBA go? Is the RBA finally joining global central banks in their race to zero per cent rates?
 
HOW THE BANK MAY BE THINKING
 
The RBA's Statement of Monetary Policy, released on Friday, was "extremely dovish" says UBS chief economist Scott Haslem.
 
Rather than indicate the low inflation figures were a temporary blip, the RBA said inflation was likely to remain below, or at the bottom end of their 2 per cent - 3 per cent target. And not just for the next few months, but for the next three years.
 
 The global trend of declining interest rates. 
The global trend of declining interest rates.
"The size of the downgrade was arguably unprecedented," said Mr Haslam. "While we have been looking for structurally lower inflation, prior RBA comments implied a muted 'reaction function' to low CPI."
 
As such, UBS has revised its expectations for the RBA to cut another quarter point on August 2 to 1.5 per cent, with the risk of further easing, though it doesn't expect it to head in earnest towards 0 per cent rates.
 
But further easing is on everybody's mind, and if inflation falls further will that bundle the RBA toward the unconventional monetary policy actions taken globally to fight persistent, lagging inflation?
 
Of the big four local banks, Commonwealth Bank of Australia, Westpac and ANZ have said they expect one more interest rate cut this year, also most likely in August.
 
WHEN?
 
While there's a possibility of a rate cut in June, most economists tend to think the RBA board will take a more staggered approach.
 
"The board had this forecast set in hand when they met this week, so if they saw the case as sufficiently urgent, they would have cut 50 basis points," says JPMorgan economist Ben Jarman.
 
Additionally, as inflation concerns prompted the latest rate cut, most economists are content to wait until the next inflation reading, which isn't until late July and given that demand isn't weakening, the timing of cuts isn't as critical.
 
"We are expecting another easing, with the risk being that the terminal cash rate probes below 1.5 per cent," says Mr Jarman, teetering on the edge of calling two more cuts this year.
 
National Australia Bank has left its 1.75 per cent forecast unchanged for the year, though chief economist Ivan Colhoun points out a persistently weaker Australian dollar should take some of the pressure off the central bank.
 
One of the few economists to predict this month's RBA rate cut, Capital Economics chief Australia economist Paul Dales, is wary of calling another two cuts this year, though he says it's entirely possible.
 
"The bottom line is that because low underlying inflation is due to the previous poor performance of the economy, it won't go away anytime soon," he says.
 
AUSTRALIA AND THE WORLD
 
Mr Dales argues the Australian economy has a "huge amount of spare capacity" thanks to an underperformance in GDP growth over the last eight years, which weighs heavily on inflation. Mr Dales says the economy has the potential growth rate of 2.75 per cent, which it has not met in seven of the last eight years.
 
"This is a strong sign that the RBA will soon cut rates to 1.5 per cent and that rates will either fall further or stay at 1.5 per cent for a while."
 
Mark Walton, Singapore-based senior economist at BNP Paribas, sees Australia finally catching the deflation that China has been exporting to the rest of the world.
 
"I don't think there's a central bank on the planet that hasn't been surprised to the downside by inflation," says Mr Walton. "And the outlook is going to remain dominated by global inflation, if not disinflation."
 
Mr Walton expects this week's Chinese PPI index reading to be a negative industrial number, following the indexes continual fall on a year-on-year basis for the last 48 months.
 
"There are other disinflationary forces operating in Australia, particularly competitive pressures and so I think the RBA will have two more cuts before the year is out," says Mr Walton.
 
"The next one will be in June. I'm not quite going to call an August cut as well, but I think it's a 50/50 cut."
 
The low inflation figures, and the resulting shift in the RBA's thinking, follows the shift in labour market dynamics. While unemployment has been steady in the last few quarters, wages growth hasn't lifted. As the RBA points out in its statement on monetary policy, union inflation expectations are at all-time lows, for the short term and the long term.
 
Adding to that, as mining projects have dried up, workers have moved back to the cities in search of employment. However, these workers are paid considerably less than they were in the resources sector, and this sectorial shift has dragged on the country's overall inflation figure.
 
This has turned what was recently a rosy outlook for the Australian economy a lot murkier. 

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Well after a few years of crazy low interest rates I think they are about to rise.

 

I base this on the fact that this morning invoicing run showed I am technically mortgage freeeeeeee and I figure the world revolves around me.

 

(technically in that I have the money to pay off the mortgage in various bank accounts and outstanding invoices, realistically it'll take a few months for them to be paid and to get all the transfers done).

 

Probably not the right place to post this, maybe predictions would be better, but I am just so damn happy to be technically out of debt now that I had to share :)

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Well after a few years of crazy low interest rates I think they are about to rise.

 

I base this on the fact that this morning invoicing run showed I am technically mortgage freeeeeeee and I figure the world revolves around me.

 

(technically in that I have the money to pay off the mortgage in various bank accounts and outstanding invoices, realistically it'll take a few months for them to be paid and to get all the transfers done).

 

Probably not the right place to post this, maybe predictions would be better, but I am just so damn happy to be technically out of debt now that I had to share :)

 

It's a great feeling. Well done.

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Thanks. Now I guess I need to find an investment which is even faintly close to the return that paying a mortgage has, doubt that will be easy.

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Yeah i guess that prediction on your charts is as good as it gets.

2018-2019 things are going south :)

 

In that timeframe also watch out for freak weather destroying crops and a pandemic. The Happy times are now, lets enjoy!

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