Interest rate rise?

[Gundini]

And it would be more politically sensitive to hike rates 1/4 points now than closer to the election, PLUS, doing so now will hopefully temper whatever expansionary (ballot-buying) budget is released before the election.

This is a good point, although I believe the RBA is independant of political bias, but as we know all is not always as it appears!

So it seems from our consensus that rates will rise .25%.

You would have to think the market will pull back after the ann. May be a buying oppotunity...

Is it 10am EST they announce?

 

[bvbfan]

They announce at 9.30

 

[brendan87]

It's 9:30. And we are lucky to have an independent CB in Australia. But don't forget that the RBA board members are appointed by the commonwealth govt. so while if absolutely needed I'm certain they would not hesitate to change mon. policy close to an election if the macro conditions warranted - I think that where practical, they would sooner work around the electoral cycle. Plus the CB has been under so much criticism from the Lib. party because they stupidly promised low interest rates last election and the public, not knowing any better, gobbled up the bait - so while hiking rates against the election-wishes of the incumbents will gain the RBA great credibility in the eyes of economists, constant media outcry by the Lib. party over the RBA's "reckless" rate hikes (reckless towards the 'mortgage' belts in the electorates in suburban NSW/VIC - where failure to raise rates would be reckless towards 'boom' areas like WA, SE QLD where the housing market is still very frothy and wage/inflation pressures are huge) tends to undermine the RBA in the general public's eyes. Remember that the ultimate target of mon. policy is to change aggregate demand (to change inflation) - of which consumption is the main element - and middle-australia is the nation's "consumer". The RBA has even explicitly targetted consumers in its publications, warning of excessive spending and rising personal debt levels. Anyway, to more pertinent issues: I wonder what this morning holds.....

 

[Glenhaven]

Poll has closed up bit. The experts (????) now say very likely. Property prices in the mortgage belt will be impacted.

 

[Gundini]

It's 9:30. And we are lucky to have an independent CB in Australia. But don't forget that the RBA board members are appointed by the commonwealth govt. so while if absolutely needed I'm certain they would not hesitate to change mon. policy close to an election if the macro conditions warranted - I think that where practical, they would sooner work around the electoral cycle. Plus the CB has been under so much criticism from the Lib. party because they stupidly promised low interest rates last election and the public, not knowing any better, gobbled up the bait - so while hiking rates against the election-wishes of the incumbents will gain the RBA great credibility in the eyes of economists, constant media outcry by the Lib. party over the RBA's "reckless" rate hikes (reckless towards the 'mortgage' belts in the electorates in suburban NSW/VIC - where failure to raise rates would be reckless towards 'boom' areas like WA, SE QLD where the housing market is still very frothy and wage/inflation pressures are huge) tends to undermine the RBA in the general public's eyes. Remember that the ultimate target of mon. policy is to change aggregate demand (to change inflation) - of which consumption is the main element - and middle-australia is the nation's "consumer". The RBA has even explicitly targetted consumers in its publications, warning of excessive spending and rising personal debt levels. Anyway, to more pertinent issues: I wonder what this morning holds.....

Nice post Brendan, you seem to have a good grasp of monetary policy.

Just a thought, does anybody know why they move rates in .25% increments? Is it for simplicity of round numbers?

Wouldn't it be more prudent to move rates in .01%'s ?

I know more complex, but could be more precise. Let's face it, it has been a while since I've used my abacus...

 

[Gundini]

Interest Rates Unchanged! 6.25%

 

[brendan87]

rates unchanged!

 

[Gundini]

You would think today the market would fly... Dollar down, metals up, except Gold, Dow up big, interesting to see what happens...

 

[brendan87]

I think this is a very conservative decision and I think that the RBA will have less breathing room in the instance of future data releases ie. if CPI/Unempl/GDP data come in unexpectedly high/low then the RBA will be forced to move = more equity market volatility !! YAY (not!) but I suppose in the short-term, self-interested mindset the decision is good. Should be another profitable day on the ASX, especially with the good lead from the Dow, lower AUD will help some co's (although watching the AUD it is now up to 8080 from 8065(just following 9:30 - I was expecting a bit more slippage).

 

[Realist]

Excellent, the market should be up today! :

 

[Glenhaven]

Us minority voters in the poll got it right. I was really concerned for the property prices in the morgage belt and the impact. Good decision.

 

[The Mint Man]

Only 37% of us picked it right, alot of doomsayers on here.

 

[Gundini]

Us minority voters in the poll got it right. I was really concerned for the property prices in the morgage belt and the impact. Good decision.

I would think a modest rise of .135% would have probably been the result if the RBA could make more sensitive adjustments, but good result for those struggling with their mortgages.

Nobody wants to see forclosures.

That said, as wayneL mentioned earlier, it is probably just delaying the pain.

Let's face it, people will be lining up at Harvey Norman, with plastic afoot to hock up a plasma. Bit of a sad world this buy today/ pay tomorrow concept, except for houses of course.

 

[Uncle Festivus]

I voted no, but only makes it a certainty for next month I guess, maybe 50 points

 

[The Mint Man]

Let's face it, people will be lining up at Harvey Norman, with plastic afoot to hock up a plasma. Bit of a sad world this buy today/ pay tomorrow concept, except for houses of course.

If people are that silly then so be it.
I can't stand people complaining about the interest rates rising when the real reason they are in trouble in the first place is because they have no money handling skills, even if you tried to explain what they are doing wrong they don't listen.
Don't get me wrong though, I would love the interest rates to stay put but I'm not counting on it and this is exactly where some fall off. People have to learn to make careful decisions before buying that big plasma or LCD.

 

[>Apocalypto<]

Let's face it, people will be lining up at Harvey Norman, with plastic afoot to hock up a plasma. Bit of a sad world this buy today/ pay tomorrow concept, except for houses of course.

so true and it is common place now to randomly call any one and convince them they need a credit card.

God I can't stand those pushy pricks trying to convince me why i need a credit card!

 

[Kimosabi]

so true and it is common place now to randomly call any one and convince them they need a credit card.

God I can't stand those pushy pricks trying to convince me why i need a credit card!

I think the objective is to get everyone into so much debt until they can't service their debt anymore and then...

 

[steven1234]

I don't own property... At this stage i would love an interest rate rise, a HUGE one at that to push house values down.

 

[YELNATS]

I believe the RBA is independant of political bias

Really, is anyone free of political bias? Do all the RBA board members vote informal at elections? lol

 

[Kimosabi]

Really, is anyone free of political bias? Do all the RBA board members vote informal at elections? lol

Considering most of the board members are also Directors of some of Australia's largest companies, I suspect most of the Members would have leanings towards the Liberal's...