RBA April '09 Interest rate decision

[Uncle Festivus]

A bit of uncertainty over this one, economists are divided? I think they will give another 0.25 cut?

 

[MACCA350]

I hope they will hold rates........and wish they'd increase rates.......I'm getting sick of such low interest earnings

It's like taking money from those who lend it to the banks and giving it to those who are borrowing it from the banks..........I'm earning half what I was only a few months ago

cheers

 

[ivant]

I hope they will hold rates........and wish they'd increase rates.......I'm getting sick of such low interest earnings

It's like taking money from those who lend it to the banks and giving it to those who are borrowing it from the banks..........I'm earning half what I was only a few months ago

cheers

look on the bright side. Inflation goes up, and that means your stock portfolio, or other assets benefit.

 

[Awesomandy]

I vote for a hold. The stimulus payments are coming through, and in today's environment, a drop > 25 points is needed to have any effect. The rates are quite low already as well, so there really isn't much ammo left for later.

 

[MrBurns]

I'm sort of hoping they'll bump them up to around 15% just for something different.

 

[Nero64]

Increase it by 1%..that will wipe the smiles off the first home buyer's faces

No seriously I reckon they will hold for the time being. Glen Stephens has probably backed a bit on the aussie and he doesn't want his profits to go backwards now does he

 

[MACCA350]

I'm sort of hoping they'll bump them up to around 15% just for something different.

I like the sound of that

cheers

 

[MRC & Co]

Yeh, this will be interesting.

I think this wk will see the top being set on this rally, perhaps it already was today, with little to no interest either way, US looking weak tonight after hitting 850s on the S&P and bouncing back down and the chart looking in a nice shorting position, intersecting with a large zone of resistance. It is tanking right as I type after rolling over.

The RBA will take into account both GDP and CPI. The former which saw a negative for the first quarter last time around, and one more will mark the official recession here in OZ. CPI was high, but is rapidly declining, from 1.5% to 1.2% to -0.3% last quarter, another quarter of similar decline and negativity in the inflation rate would see a drop out of the 2-3% target band.

Stimulus package unfortunately, won't have a large affect on GDP nor inflation IMHO.

Result: I would not be surprised to see a cut of 0.5% considering the aforementioned factors and the fact that we are rapidlly approaching a deflationary cycle.

Then again, I am not the RBA, but will be looking for a bigger slash than expected, at 0.5%. How will this be interpreted and the market react? I will look for the obvious quick spike by traders hitting the market, but after that initial move, it's anyones guess. I will not be holding strong longs, that's for sure.

Either way, interesting times once more.

GL.

 

[Julia]

I'm sort of hoping they'll bump them up to around 15% just for something different.

When you're looking for a seconder on your nomination to the Reserve Bank Board, you can count on me, Mr Burns.

 

[Amor_Fati]

I think they will cut, probably by 25 basis points.
My thinking is that the negative GDP data and the probable ineffectiveness of the tax bonuses, together with the fact that the banks will probably pass on less than the full amount, leave little argument not to.

 

[MrBurns]

Probably .25% (whats all the basis points BS?) just to keep the ball rolling it seems imterest rates globally are almost nil so we will head thesame way.

What I'd like to know is what do people do in theUS and particularly Japan do to get income from cash ? rate in Japan is 1/10th of 1% ? ????????????????

Julia , the limo picks you up at 10 so we can go and explain to the RBA , together, that we ARE different so interest rates should be going UP not DOWN.........

we arent like the rest of the world.
our banks are robust (dont ya hate that word?)
we are better placed to handle the downturn, repeat forever
we are invincible
we have Swan and Rudd

all good arguments ?

 

[Timmy]

I'm at half a pussent.

 

[kincella]

my 2 cents worth....
the RBA meets today..so we know at 2.30pm...but the poll on this site, does not close until 11.30 tomorrow the 8th ????
the RBA was told last month by the IMF to cut rates and cut them fast....but they did nothing...
I believe the rate should be cut in line with most of the g20 brigade down to 2% or less
so they should cut it by 1%.....but I think it will be cut to .50
if they think the stimulous package coming out this week will sae them...wrong
unemployment is the big issue

 

[Sir Osisofliver]

I find my thoughts mirror a lot of what MRC & Co had to say.

I think this wk will see the top being set on this rally, perhaps it already was today, with little to no interest either way, US looking weak tonight after hitting 850s on the S&P and bouncing back down and the chart looking in a nice shorting position, intersecting with a large zone of resistance. It is tanking right as I type after rolling over.

I concur with the above and I'll go out on a limb a bit and say that I expect the negativity on our market will last between six and nine weeks.

The RBA will take into account both GDP and CPI. The former which saw a negative for the first quarter last time around, and one more will mark the official recession here in OZ. CPI was high, but is rapidly declining, from 1.5% to 1.2% to -0.3% last quarter, another quarter of similar decline and negativity in the inflation rate would see a drop out of the 2-3% target band.

Stimulus package unfortunately, won't have a large affect on GDP nor inflation IMHO.

I agree with all of this as well.

Result: I would not be surprised to see a cut of 0.5% considering the aforementioned factors and the fact that we are rapidlly approaching a deflationary cycle.

Here however our opinions diverge. I think the RBA will hold interest rates at the meeting today and keep the powder dry for the next meeting. At the next meeting however I anticipate that the drop will be another 25 basis point (hey Burns - whats the point of learning the jargon if you don't use it?) drop but won't be surprised to see a 50 basis point fall.

Either way, interesting times once more.

Oh my yes - and fun too

Cheers

Sir O

 

[Timmy]

unemployment is the big issue

Good point kincella.

The RBA is specifically required to pay attention to employment levels; from the Reserve Bank Act, cited at the RBA website:

The Reserve Bank Board's obligations with respect to the formulation and implementation of monetary policy are laid out in the Reserve Bank Act. Section 10(2) of the Act, which is often referred to as the Bank's 'charter', says:

'It is the duty of the Reserve Bank Board, within the limits of its powers, to ensure that the monetary and banking policy of the Bank is directed to the greatest advantage of the people of Australia and that the powers of the Bank ... are exercised in such a manner as, in the opinion of the Reserve Bank Board, will best contribute to:

(a) the stability of the currency of Australia;
(b) the maintenance of full employment in Australia; and
(c) the economic prosperity and welfare of the people of Australia.'

 

[kincella]

Timmy, since you are a mod..why is the poll open until tomorrow, when the result will be known at 2.30 today ???

 

[Timmy]

Timmy, since you are a mod..why is the poll open until tomorrow, when the result will be known at 2.30 today ???

I think it is because the options available to someone posting a poll are quite limited; it doesn't appear to be possible to fine-tune the poll closing time.

 

[Uncertain Times]

If they keep rates high will we continue to see the AUD rise or is it rising due to the US Treasury printing more money and devaluing the USD?

Primary producers never benefit from a high AUD and it may finish off local manufacturing if the AUD is so to high.

I think 0.5% cut to get the AUD down. The Big4 arent going to pass the cut on anyway as Gail Kelly said yesterday on Sunrise that they are having issues with funding costs.

 

[noirua]

Let's cut those rates down to 2% immediately! No more silly sallying around!

 

[MS+Tradesim]

RBA decision: -0.25%, now at 3.00%