# RBA Feb '10 Interest Rate decision



## Timmy (2 February 2010)

Statement to be released in about an hour and a half (2.30 pm AEDST).

It is about time the RBA started kicking some heads ... enough of this 0.25 hikes each time ... its time for 0.5% ... NOW!  

Residential RE prices are surging ... if we can get a housing asset bubble forming now there will be no stopping it when the Australian economy really takes off in 2010.

If it is not 50bp this time, it will be next meeting.


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## BradK (2 February 2010)

Lol. Won't be .50% ... my tip is 0.25 and Westpac will go up .20 

Brad


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## prawn_86 (2 February 2010)

The rate rise is pretty much factored in to the AUD rate, however there is always that slight uncertainty, so we are expecting a big of a shove upwards for the AUD when the RBA confirms a rate hike.

For day traders be wary of the buy the rumour sell the fact.


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## Timmy (2 February 2010)

BradK said:


> Lol. Won't be .50% ... my tip is 0.25 and Westpac will go up .20
> 
> Brad




Good on ya Brad.
I am heating up the humble pie.
Its you or me buddy.


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## nunthewiser (2 February 2010)

Reckons bump it up 4% in one go and stop pussyfooting around


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## Timmy (2 February 2010)

nunthewiser said:


> Reckons bump it up 4% in one go and stop pussyfooting around




You DA MAN, NUN!


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## nunthewiser (2 February 2010)

LOL...nah m8 i mean bump it up another 4% on top in one hit . That,ll sort out who,s wearing jocks  or who isnt .....


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## Timmy (2 February 2010)

I hope Glenn Stevens is listening to you Nun.  

He has done well so far, he just needs to harden up a bit now,


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## skc (2 February 2010)

Read somewhere about different rate for different loans which makes sense.

Housing bubble needs to be pricked now and 50 bps is very sensible.

Small businesses probably need a little more time and space and confidence. So I wouldn't mind seeing their rate remains flat.

But can't rely the bank to be so sensible, can we...


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## Timmy (2 February 2010)

Agree with you skc.

Unfortunately RBA rate decisions are a bit of a WMD ... business is going to be collateral damage as the RBA attacks this housing asset bubble.


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## MRC & Co (2 February 2010)

94% priced in for a 25pb rise.

It is also widely expected and mostly already priced in, that the RBA will go on hold after this, so a lot should come down to the comments.  Confirmation of this may weigh on yields and I think the mkt will be looking for an excuse to say “RBA done for now” so even a neutral press release could see AUD sell off after an initial spike from the rate rise itself  (unless of course, this exact view gets front-ran)........


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## Taltan (2 February 2010)

The wawy the market reacted today its prettty clear there are no surprises from those in the know. 0.25% rise it is


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## Timmy (2 February 2010)

Thanks MRC and Taltan.

If only GG was here then we would know what it was going to be for sure.


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## nunthewiser (2 February 2010)

Nice lil dip coming into the announcement


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## nunthewiser (2 February 2010)

Timmy said:


> Thanks MRC and Taltan.
> 
> If only GG was here then we would know what it was going to be for sure.




LOL..........your a star


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## Timmy (2 February 2010)

Timmy said:


> I am heating up the humble pie.




 ....... please pass the salt.


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## nunthewiser (2 February 2010)

unchanged


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## nunthewiser (2 February 2010)

wimps


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## Timmy (2 February 2010)

nunthewiser said:


> wimps




You can't blame them, I hear their connection to ASF was down so they had no idea what to do.


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## prawn_86 (2 February 2010)

AUD absolutely destroyed. Around the 88c levels against the USD now. Below 87 and its look out below


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## satanoperca (2 February 2010)

Gutless pricks. Just let inflation and the housing bubble grow.

Cheers


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## MRC & Co (2 February 2010)

What a joke.  Just got owned.  Day/wk over on that one!


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## prawn_86 (2 February 2010)

MRC & Co said:


> What a joke.  Just got owned.  Day/wk over on that one!




Yep i've got some explaining to do after telling people to hold off payments until after the decision


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## skc (2 February 2010)

Damn it Gleno... didn't you get that memo that I am going away on holidays and want a strong AUD?!!

I also want to park some money in a term deposit and look what you have done!

Bloody kell.


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## Mr J (2 February 2010)

That was a pretty sweet 100 pip drop. Hope no-one was caught out scalping .


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## skyQuake (2 February 2010)

RBA being fiesty.

Surprised by the way the SPI acted as if it was a 25bp rise!
That aud drop should boost our miners/exporters, though nothing has happened on that front yet.


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## MRC & Co (2 February 2010)

skyQuake said:


> RBA being fiesty.
> 
> Surprised by the way the SPI acted as if it was a 25bp rise!
> That aud drop should boost our miners/exporters, though nothing has happened on that front yet.




Yep, exactly!  SPI is a joke, if they raised it 50bps we would have shot through the floor, but no rise (basically equivelent of a surprise cut and we fall anyways)!  Shows the bearish sentiment around at the moment!

I was max long at the top of that big green candle in the decision, swept market!!


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## professor_frink (2 February 2010)

MRC & Co said:


> Yep, exactly!  SPI is a joke, if they raised it 50bps we would have shot through the floor, but no rise (basically equivelent of a surprise cut and we fall anyways)!  Shows the bearish sentiment around at the moment!
> 
> I was max long at the top of that big green candle in the decision, swept market!!




ouch!

Sorry to hear MRC


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## Aussiejeff (2 February 2010)

skyQuake said:


> RBA being fiesty.
> 
> Surprised by the way the SPI acted as if it was a 25bp rise!
> *That aud drop should boost our miners/exporters, though nothing has happened on that front yet.*




That aud drop might also push petrol prices up over coming weeks, adding to inflationary pressures before next rate decision. So every chance next interest rate might well have to go up 50bps if inflation takes off now.

Aww, she'll be right, mate! A beaming KRudd gets his wish (but of course, this was a non-politically influenced decision by the RBA, wot?)


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## Wysiwyg (2 February 2010)

A schmacko for *CommSec's Chief Economist Craig James* for saying this morning that (unquote)  a 25 b.p. rise was almost a certainty.

These finger on the pulse types couldn't lie straight in bed.


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## Aussiejeff (2 February 2010)

Wysiwyg said:


> A schmacko for *CommSec's Chief Economist Craig James* for saying this morning that (unquote)  a 25 b.p. rise was almost a certainty.
> 
> These finger on the pulse types couldn't lie straight in bed.




Yeah.

He can join the endless queue of reprobate pseudo-economists heading for their nearest wine cellar to drown in a collective sigh of sorrows....

Speaking of bwankers, I wonder if any of the Big4 will be tempted to raise rates regardless?


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## prawn_86 (2 February 2010)

Wysiwyg said:


> A schmacko for *CommSec's Chief Economist Craig James* for saying this morning that (unquote)  a 25 b.p. rise was almost a certainty.
> 
> These finger on the pulse types couldn't lie straight in bed.




To be fair it was almost a certainty. Looking at the rates and the interest differentials 96% had been priced in. Everyone i worked with thought it was a sure thing.

I suppose you predicted it would be left on hold wizee?


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## Wysiwyg (2 February 2010)

prawn_86 said:


> To be fair it was almost a certainty. Looking at the rates and the interest differentials 96% had been priced in. Everyone i worked with thought it was a sure thing.
> 
> I suppose you predicted it would be left on hold wizee?




Just looking and listening Prawn. No figjam on my sandwiches for lunch.


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## awg (2 February 2010)

Havn't studied any reports, but wonder how much the spectre of mortgage pressure, especially amongst the new home owners entered into reasoning.

Anecdotally, that pressure is biting hard already


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## Timmy (2 February 2010)

awg said:


> Havn't studied any reports, but wonder how much the spectre of mortgage pressure, especially amongst the new home owners entered into reasoning.
> 
> Anecdotally, that pressure is biting hard already




The minutes of the Board meeting will be released in 2 weeks - we should get more of an insight into the RBA's reasoning from these.


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## Whiskers (2 February 2010)

nunthewiser said:


> unchanged






nunthewiser said:


> wimps






satanoperca said:


> Gutless pricks. Just let inflation and the housing bubble grow.
> 
> Cheers






MRC & Co said:


> What a joke.  Just got owned.  Day/wk over on that one!




 are you guys really that surprised and dissapointed!?



Wysiwyg said:


> A schmacko for *CommSec's Chief Economist Craig James* for saying this morning that (unquote)  a 25 b.p. rise was almost a certainty.
> 
> These finger on the pulse types couldn't lie straight in bed.




I think it's called 'self-interest' 

I'm not surprised that they left it alone. As my followers  would have noticed, I've been calling/advocating for the AUD to fall against the USD for the benifit of our economy. I felt that has to happen to keep the playing field a bit level. 

Since the lingering troubles with Greece in Europe and the US economy turning around but at a much slower rate than Aus, ie the USD not rising very strongly, I suspect the RBA was thinking in terms of that equilibruim I mentioned earlier, especially since the RBA had said earlier that the banks had done much of their work by raising their rates in excess of the reserve.

The problem Aus has atm is probably more about controlling or at least styfiling the kneejerk excessive reactions of our banks to the RBA decisions and any unwanted side effects in particular sectors to our local economy in the context of rate rises against phasing out stimulus programs.


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## johnnyg (2 February 2010)

Can someone who was watching the Currency (AUD/USD) tell me how quickly it dropped from the decision? Is it instantaneous? ie 100 pips in 2 seconds? ect


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## Tysonboss1 (2 February 2010)

nunthewiser said:


> Reckons bump it up 4% in one go and stop pussyfooting around




Hey Nun,

Whats your angle, why do you want rates to rise so quickly. 

Are you sitting on a pile of US dollars.


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## nunthewiser (2 February 2010)

Tysonboss1 said:


> Hey Nun,
> 
> Whats your angle, why do you want rates to rise so quickly.
> 
> Are you sitting on a pile of US dollars.




I have cash sitting in a Deposit due to be turned over shortly 

I also am one of those scavenger types that dont mind picking the bones of the less fortunate that will get smacked if rates were to jump that fast .......

Im not here for a popularity contest so any moral arguments one may have towards my strategys in taking advantage of other peoples debt induced circumstances will fall on deaf ears


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## skc (2 February 2010)

johnnyg said:


> Can someone who was watching the Currency (AUD/USD) tell me how quickly it dropped from the decision? Is it instantaneous? ie 100 pips in 2 seconds? ect




about 25 secs in my charts which are probably slightly inaccurate. The first 30pips were pretty much instantaneous.


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## drsmith (2 February 2010)

Although not stated in the minutes I wonder whether the RBA board has softened its position on inflation in favour of growth (Can we now have both reasonable growth and low inflation ?). Moderate inflation would help in lowering the real value of debt and contain assets (house prices) without the obvious impact on nominal value. There's also income tax bracket creep for a Federal Government keen to raise taxes.

Higher inflation would also demand higher income return from investments to compete ultimately with rising interest rates. It will be interesting to see how quickly this is factored into equity valuations.

Some inflation is perhaps the least obviously painful way to cut real spending power and raise income taxes as it spreads the pain over a longer timescale.


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## johnnyg (2 February 2010)

skc said:


> about 25 secs in my charts which are probably slightly inaccurate. The first 30pips were pretty much instantaneous.




Cheers skc, do you think it would of been easy money for those with a quick enough connection and without trembling hands? :


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## nunthewiser (2 February 2010)

IF someone would be kind enough or can be bothered , is there any chance of posting up the currency chart AND the SPI chart on a 5 min timeframe FROM 45 mins before the announcement up until 30 mins after.

It might be very enlightening on just how confidential these desicions are.

I did mention the Dip earlier when it was occuring.

Thankyou in advance


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## nunthewiser (2 February 2010)

I can post the charts myself if no one intrested but you have seen my chart posting efforts already and they aint pretty.

worth a look though.


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## johnnyg (2 February 2010)

I'd be interested to see nun.


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## Investor82 (2 February 2010)

Personally I couldnt be happier with the decision. 
Interest rates stay low, USD/Aud crashes!!! I dont see how that is bad news for anyone (well for me anyway)...


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## prawn_86 (2 February 2010)

johnnyg said:


> Can someone who was watching the Currency (AUD/USD) tell me how quickly it dropped from the decision? Is it instantaneous? ie 100 pips in 2 seconds? ect




Pretty much. If you were long you wouldnt have had a chance to close your position before it dropped put it that way


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## Tysonboss1 (2 February 2010)

nunthewiser said:


> I also am one of those scavenger types that dont mind picking the bones of the less fortunate that will get smacked if rates were to jump that fast .......
> 
> Im not here for a popularity contest so any moral arguments one may have towards my strategys in taking advantage of other peoples debt induced circumstances will fall on deaf ears




No judgement from me,


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## skc (2 February 2010)

johnnyg said:


> Cheers skc, do you think it would of been easy money for those with a quick enough connection and without trembling hands? :




Sure if you had quick fingers or simply place a stop entry you can probably catch some of it today.

But over the long term you will have to test and see whether it is in fact a valid strategy. Plenty of times the market goes 50 pips one way (the way it should), snaps 75 pips back the other (the way it shouldn't) and wait 15 minutes before moving in the right direction again, leaving you in the wake.

News trading is an entire trading game of it's own... and it's not as easy as it looks.


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## skyQuake (2 February 2010)

Looking at tick data it was probably impossible to catch; the first tick gapped to 884, then ran a bit more. There was some gains to be made, could probably get filled at 882ish. But you need algos that interpret news to catch the early stuff.


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## ThingyMajiggy (2 February 2010)

nunthewiser said:


> IF someone would be kind enough or can be bothered , is there any chance of posting up the currency chart AND the SPI chart on a 5 min timeframe FROM 45 mins before the announcement up until 30 mins after.
> 
> It might be very enlightening on just how confidential these desicions are.
> 
> ...




I'll give it a go too, but mine ain't nothing pretty either  first chart is from http://www.dailyfx.com/charts/ second chart is SPI.

 I believe I have the correct spots, feel free to correct me if I'm wrong though, anyone.


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## nunthewiser (2 February 2010)

Thanks Sam

Pretty sure the SPI started dipping about 15 mins before the RBA desicion earlier as was trading it via city cfd equivelant around that time . i did point it out in chat at time that it looked like it sprang a leak after travelling sideways in a narrow range for the hour b4 hand.


Thanks for that though .


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## MRC & Co (3 February 2010)

professor_frink said:


> ouch!
> 
> Sorry to hear MRC




All good Frink, just got it all back today!


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## professor_frink (4 February 2010)

MRC & Co said:


> All good Frink, just got it all back today!




Nice MRC


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## Timmy (16 February 2010)

The minutes for this meeting are released.

Minutes of the Monetary Policy Meeting of the Reserve Bank Board
Sydney - 2 February 2010

Comment from _The Australian_
RBA minutes reveal 'finely balanced' decision to hold interest rates at 3.75pc

The idiot who was calling for a 0.5% rise, mainly to counter a potential housing bubble, was way off (hello ).  The Minutes had this to say about house prices:


> There were some tentative signs that parts of the housing market were seeing the effect of the decline in assistance to first home-buyers and higher interest rates, though high-end housing values were continuing to increase.


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