Interest Rates

noirua · 16 January 2009

Eurozone interest rates fell 0.5% Thursday to 2.0%.

Annual inflation in the 15 countries making up the zone, fell from 2.1% to 1.6% in December. ( this rate reduction also affects Slovakia, the recent 16th member to adopt the euro currency, in January 09).

It was confirmed that the Eurozone has been in recession since September 2008.

GumbyLearner · 16 January 2009

noirua said:
Eurozone interest rates fell 0.5% Thursday to 2.0%.

Annual inflation in the 15 countries making up the zone, fell from 2.1% to 1.6% in December. ( this rate reduction also affects Slovakia, the recent 16th member to adopt the euro currency, in January 09).

It was confirmed that the Eurozone has been in recession since September 2008.

Until the methods of any politically backed (LEFT or RIGHT) starts really reporting figures (minus food or oil inputs, well I could be wrong but arable land and produtive wells are both in a percentage decline from realiable sources ala Jim Rogers research or the UN) So where should I invest?

sinner · 19 January 2009

Hi guys,

Does anyone have any idea what the real inflation rate for Aus currently stands at? Do we really trust the RBA data?

Seems to me that in the sectors that matter to your average Joe, inflation is still going strong.

One from today:

http://business.smh.com.au/business/inflation-slides-to-lowest-since-2005-20090119-7k8j.html

A snippet

Don Harding from the Melbourne Institute said the inflation gauge suggested the official consumer price index (CPI) had fallen by around 0.64% over the fourth quarter.

That would bring the annual pace down sharply to around 3.3%, from 5.0% in the third quarter, which had been the highest since 2001.

However, measures of core inflation were not so promising. The gauge measuring prices excluding fuel, fruit and vegetables climbed 0.6% in December, lifting the annual pace of inflation to 3.6%, from 3.5% in November.

The trimmed mean, which excludes the biggest price changes in any month, also rose 0.2% in December, while the annual rate rose back to 3.6%, from 2.9% the month before.

Contributing most to the overall change in December were price falls for automotive fuel, and fruit and vegetables. The falls were partially offset by price rises in rents, household supplies, and holiday travel and accommodation.

The price of fuel fell by around 15% in December and was approximately 25% below its level a year ago.

In contrast, rents rose by almost 3% in December, to be around 14% higher for the year.

Aussiejeff · 23 January 2009

Now predictions of cash interest rates below 2% in Oz by mid 2009....

Australian Central Bank May Cut Key Rate Below 2%, Fraser Says

By Gemma Daley

Jan. 23 (Bloomberg) -- Australia’s central bank may more than halve its benchmark interest rate as the nation enters a long and deep recession, former Governor Bernie Fraser said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=av_BWw.cwneI&refer=home

0% by Xmas?

investorpaul · 23 January 2009

I think interest rates will definately fall to 3% or less given the increasingly bad news being released/published almost daily at the moment.

My concern is that house prices (in most parts of aust) have not dropped by hughely significant levels yet. I fear that these low interest rates will continue to prop up house prices at these unsustainable levels and at some point the penny must drop.

The US and Uk's house prices as a percentage of income are now much lower than Australias and it is unrealistic to believe we can defy that forever.

SenTineL · 25 January 2009

Article in The west australian quotes someone saying the rate will fall to below 2% after the February meeting ?!?!

Paper is in bin now so I don't have details, just came across this thread and though I'd mention it

skyQuake · 25 January 2009

From the ASX website:
http://www.asx.com.au/sfe/targetratetracker.htm

3rd 'click here' link.

SenTineL · 25 January 2009

nice link thanks for that, i wish i'd kept the paper

Calliope · 29 January 2009

The inflation rate is down. Well not really. Take petrol out of the equation and the quarterly CPI actually went up. So we are paying higher prices for most things and the interest rates look like coming down as a result.

A double whammy for retirees, who don't use much petrol anyway. Higher living expenses and lower interest for money in the bank.

sinner · 29 January 2009

Calliope said:
The inflation rate is down. Well not really. Take petrol out of the equation and the quarterly CPI actually went up. So we are paying higher prices for most things and the interest rates look like coming down as a result.

A double whammy for retirees, who don't use much petrol anyway. Higher living expenses and lower interest for money in the bank.

Here are the latest figures:

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6401.0/

6401.0 - Consumer Price Index, Australia, Dec 2008 Quality Declaration
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 28/01/2009

SenTineL · 21 February 2009

So what's the verdict on the next move?

Futures markets have always been accurate within a week or two of the RB announcement. It's currently tracking at 100% for a 0.5% cut to 2.75%.

Yet there's speculation from the RB's minutes that they will hold off on another cut in March

SenTineL · 23 February 2009

revised figures today only at 91% for a 0.5% cut, might keep going down further this week?

sinner · 23 February 2009

If they hold interest rates, the market will punish AUD.

Just look at ZAR and the Mexican Peso when they didn't cut interest rates as much as futures expected.

Aussiejeff · 24 February 2009

sinner said:
If they hold interest rates, the market will punish AUD.

Just look at ZAR and the Mexican Peso when they didn't cut interest rates as much as futures expected.

Agreed. They are now between the rock and a very hard place. No more deep sleep nights for Mr Stevens.

hotbmw · 2 March 2009

what do u think guys? a cut by 0.5% with the banks only passing on 0.40%???

thoughts?

very interesting article below:

http://www.businessspectator.com.au...-recession-as-firms-slash--PR3YY?OpenDocument

MRC & Co · 2 March 2009

SenTineL said:
revised figures today only at 91% for a 0.5% cut, might keep going down further this week?

No rate cut and the market may hit new lows tomorrow, if it doesn't already beforehand.

Julia · 2 March 2009

News today that inflation is up, largely due to rising petrol prices.
This may influence the RBA to hold off on a cut tomorrow.

hotbmw · 2 March 2009

Recession looms as companies slash inventories; boosts case for rate cut

Australian firms ran down inventories at the fastest pace in 22 years last quarter, dramatically increasing the risk of an outright contraction in the economy and adding to the case for more rate cuts.

Monday's figures from the government also showed company profits sank 6.5 per cent in the fourth quarter, while a private survey showing Australian manufacturing activity hit record lows in February as demand slumped.

"The figures were awful," said Rob Henderson, chief economist markets at nabCapital.

"We calculate that inventories took around 1.3 percentage points from growth. Without a huge rise from net exports, gross domestic product (GDP) will be negative."

Inventories fell 1.9 per cent in the fourth quarter, confounding expectations of a 0.3 per cent rise and the biggest drop since 1986.

This represented a subtraction from GDP of $3.6 billion ($US2.3 billion), or about 1.3 percentage points, when analysts had looked for a drag of just 0.2 percentage points. That was a hard blow since GDP had been expected to have risen by 0.1 per cent in the quarter, from the previous quarter. The data are due out on Wednesday, just a day after the Reserve Bank of Australia (RBA) holds its monthly policy meeting.

"It's ugly on the face of it," said John Peters, a senior economist at Commonwealth Bank. "It means all the risks are to the downside and GDP could be substantially weaker now."

The risk of a sizable fall in GDP could prompt the central bank to cut its 3.25 per cent cash rate at its meeting on Tuesday, even though it has been hinting it would like to pause after lowering its cash rate by 400 basis points since September.

Why wait?

"We had thought they might skip March and move again in April," Mr Peters said.

"But with numbers like these, and dismal news abroad, you have to wonder why they would wait."

gfresh · 3 March 2009

Unchanged.. stick that up ya clacker media monkeys

3 March 2009
At its meeting today, the Reserve Bank Board decided to leave the cash rate unchanged at 3.25 per cent.

p.s. not directed at anybody here, just the usual media b.s. over the last couple of days that it was a "certainty" of at least a 25bps cut.

waz · 3 March 2009

I for one, was surprised.

I wonder if the case would have been different if the Fed stimulus package was a few $bil less.

I havnt read the full statement yet, will be interesting to see what their expectations for inflation are.

Id be pretty annoyed if they used the January house sales figures to justify this.
The volume of property being sold is often always incorrectly assumed to mean higher prices. In a bull market this is normally correct 99% of the time. But not in a Bear market.

Take MQG over the last few days for eg, higher volumes, lower price.

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noirua

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Aussiejeff

investorpaul

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