As US Fed aggressively increasing interest rates, plan to reach 1.75 to 2% by Dec 2022. This is a speculation.
March 2022. 0.5 - 0.1
April 2022. 0.5 - 0.1
May 2022. 0.75 - 0.1
June 2022. 1.00 - 0.25
July. 2022 1.25 - 0.25
August 2022. 1.25 - 0.5
September 2022. 1.5 - 0.5
October 2022 1.5 0.75
November 2022. 1.75 - 0.75
December 2022. 2 - 1
SelfStatistics, with next CPI due on 27/04/2022 (it will exceed 4%) and WPI due on 18/05/2022 (closer to 2.8%) and after the election. That should convince RBA to come up with first raise on 07/06/2022.
want a medal?
Yes Australia is living in some fantasy land around interest rates and inflation!
We are living in a Majority Law, elections every 3 years means. Politicians can't risk their career for the sake of fixing the things.
I'm sure once the election is over, the RBA will be like, oh look inflation is crazy high, up the rates go!! But until then, they are all fingers in their ears going lalalalala
RBA in itself is a joke. They wouldn't allow puss(y) footing around the election if they really cared about inflation.
@Brodo Faggins: I agree the RBA is a joke, I don't know what person who hasn't noticed the cost of living skyrocketing, from food, to power prices to fuel, to eating out etc. But the gov/rba keeps claiming inflation is low!
@Brodo Faggins: I'm aware and RBA are keeping IR low as they keep claiming inflation is 'low'. So as I said a few posts up
I'm sure once the election is over, the RBA will be like, oh look inflation is crazy high, up the rates go!! But until then, they are all fingers in their ears going lalalalala
Buy hard assets to hedge against inflation and cash rate hikes.
The RBA needs to (profanity) send it. 10% end of year let’s gooooooo!!!!
Powell raised rates overnight after he grew the other half of his brain so it’s about time Lowe did the same.
I am not sure if you understand what you are saying.
yep couldnt care less how high rates go, my place is paid off so this will help the savings account
this will help the savings account
Legacy banks won't pass the hikes to savings accounts. They don't have a reason to pay savers as long as savers have nowhere to go.
Albo will ring Joe: What do the unions recomend?
I didn't know the RBA publishes rates to Ozbargain. What is this from?
Speculation based on US interest rates and upcoming CPI statistics.
Its very hard to speculate because increasingly I have very little confidence in current RBA leadership. It was reckless of them in the extreme to assure people that there would be no rate increases for years when they were in absolutely no position to offer such an undertaking. Lowe's last statement was that a rate increase in the latter half of the year was "plausible". Its looking more than bloody plausible now.
Some of the inflation is likely to improve Australia's terms of trade, particularly around food and energy. That will offer relief to the AUD. Also CPI has been on less of a tear here than in the US.
If the arse starts to fall out of the dollar though, the RBA's hand will be forced. It will have to hike to keep things like fuel vaguely affordable for the average consumer and to avoid an inflationary spiral.
If they delay beyond July they will have to go 0.5 increments.
I tend to agree with you that the projected number for the next inflation result is too dovish at 3.25 percent YTD. I think its likely to be more than that. It was too early for rent increases to be reflected much in the earlier figures given that most people are on 6 to 12 month leases, but I think that will start to change.
Its actually pretty anomalous for the Australian cash rate to be lower than the US policy rate. I'm actually fairly surprised that the AUD hasn't been affected more which is why Im being circumspect and second guessing myself more than usual. People can have a look at this graph to see what I mean:- https://www.rba.gov.au/speeches/2018/images/sp-ag-2018-12-10…
I dont think that this can go on forever; at some point the rubber band has to snap.
I really do feel for people who borrowed vast sums of money to buy houses particularly in the last eighteen months. A lot of them just wanted to live in their own house and were petrified that if they didnt the prices were going to go up more. Its a real shame.
AUD not affected because of bullish commodities. US rates put huge pressure on them to move.
they bought the top
taking out million dollar loans to keep up with the joneses
the chickens are coming home to roost now
@Jason Genova: There is always an ATH after an ATH.
People buying $1M houses today will be happy that they did when it's $2M in 10Y.
https://www.elikarealestate.com/blog/tracing-buying-real-est…
https://www.business.unsw.edu.au/research-site/centreforappl…
@rektrading: @rektrading
Mate, you are really overdoing it.
do you want people to post you back with 2008-2009 data when the housing bubble went cactus?
If doesn't really matter how much those houses prices will be in 10 years when you will have declare bankrupt in 6 months.
This is not about the long-term trend, this is about "ignorance meets leverage" that was allowed to happen.
Now we have to pay for that ignorance and the use of leverage - either as a society in whole through high inflation and stupid denial of the issue or as particular individuals who managed to get on the to of ponzi pyramid.
@ALesha77: I only look at the data. People that don't like the data can choose to ignore it and the fact that an ATH is always followed by an ATH and more ATH.
do you want people to post you back with 2008-2009 data when the housing bubble went cactus?
I can pull up a chart that shows the GFC was a tiny damp on the road to 100%, 200% or +300% return in 2022.
The only thing people have to do is to buy assets and hodl.
That's it. Buy and hodl.
@rektrading: This is not going anywhere.
You CANNOT buy and hodl on LEVERAGE.
This leveraged dirt-buying has become a systemic risk that is going to affect millions of lives because the world economy has become too indebted. Well, this is where you get "interesting results" as Warren Buffet said about ignorance meeting leverage.
And part of the problem is this nagging "advertisement" of assets going up in a straight line - no, they don't.
There have to be busts especially in the over-levered consumption oriented economy that has is design to create bubbles. And now it has become "beyond repair" because politicians don't have guts to pull the trigger but it will be pulled by the market and will be much nasty that it needs to be.
This is not going anywhere.
You CANNOT buy and hodl on LEVERAGE.
Please correct me if I'm wrong but it's to my understanding that 1/3 of Australian home buyers have a mortgage.
That is the definition of buy and hodl using leverage.
@rektrading: Wasn't it the case that you said that Jerome Powell would never left the policy rate to 6%? Are you still standing by that?
@rektrading: sounds like your Saturday nights are about as exciting as mine. And he's already committed to going halfway there by 2023. Hold on to your hat bucko.
@Jason Genova: A lot of them weren't though, they just wanted a house, just any modest house. They still had to pay through the nose.
The thread on here that really got to me was from that guy who was a full time apprentice but was considering road camping in his car because he couldn't afford rent any more. What a violation of the Australian social contract.
I would agree with the first part but I think that starting from June-July, RBA will have to move much much faster.
I personally see this as an appalling denial that will get ALL of us in huge troubles with inflation and severe stagflation risks. 1970s scenario is very very real.
FED was hundred of miles behind the curve but RBA have beaten their record - truly politicized and pitiful institution. I respect dr Lowe as a person and as a banker but he is sacrificing the future of our kinds for the sake of political stability - a very bad choice to make and I think he understands that.
I would say they (government) will "fight" inflation with tax-break hand-outs, different support schemes (like the newly announced stupid NSW government co-ownership of houses to be bough by FHBs) but will certainly fail as all "merry idiots who choose to fight the optics but not the root-cause" do.
God help us all.
We’re gonna be stuffed as a country and it’s because idiots are willing to pay $1m for a mould infested shitbox home on a small patch of grass.
Absolutely stupidity and who loses? Everyone because of these morons.
Well in fairness to the morons they needed that mould infested shitbox to live in. They would have happily paid less if they could.
RBA being RBA, they won't move anything faster. No interest rate raises in 12 years explain their fastness. They are more worried about impact to the property prices as that can affect the economy. These raises also they are not willing to do it but FED raises can put more pressure on CPI which will make them move.
Market pricing in 2.15% cash rate by june 2023.
https://www.news.com.au/finance/real-estate/why-the-australi…
That would crash the housing market and RBA won't let it happen. They have to be dovish forever.
@dpk: Unfortunately they may not have a choice in the matter, unless they want to get caught in an inflationary spiral a la Venezuela or Weimar Germany.
Lowe was never a banker. He joined the RBA straight out of high school and is basically the work experience boy come good.
And he is getting paid 5 times more than Jerome Powell
Here is a chart illustrating interest rates of USA and Australia over the last 50 years or so, as well as the period where interest rates increased in the 1970s-1980s.
https://imgur.com/a/cMeLgKM
Here is the 10Y Australian bond yield - you can see it has moved up since late 2021 after the RBA shenanigans "unconventional" monetary policy.
https://tradingeconomics.com/australia/government-bond-yield
Low res images are one of my pet peeves. The text is blurry on a mobile device.
I have pet peeves also.
You can investigate the chart directly from the source so it may then display more to your liking.
https://data.oecd.org/interest/long-term-interest-rates.htm
Set the highlighted countries - add Australia, and remove countries to leave e.g. USA, adjust date sliders for the years you need to view.
Yeah, one of my pet peeves is rubbish monetary policy.
The best central banker that the US ever had, William Machesney Martin, once said that: "the job of the central bank is to take the punch bowl away when the party's getting started".
Adopting that analogy, its 6am the morning after, the partygoers are all outside vomiting in the flower bed and Philip Lowe is there with his punch bowl and ladle still doling out booze.
OzStatistics