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Because debt levels are far far higher now, then they were during previous cycles.
And because of the sudden and unexpected nature of the increase.
Because debt levels are far far higher now, then they were during previous cycles.As I was itting around waiting for todays RBA rates decision, I was idle looking at the RBA website.
This chart from the RBA highlights how from an histroric perspective, the rates of tay are nothing special in that they are still lower than at any time from 1990, and if the chart had more historical data, would go back even further would show that it is less than any valueof the cash rate as far back as 1969.
View attachment 162028
Not sure why we are all whinging about rates.
Mick
back in the '60s and '70's many people were averse to debt , maybe a home mortgage , and maybe paying off a car/truck/caravanAs I was itting around waiting for todays RBA rates decision, I was idle looking at the RBA website.
This chart from the RBA highlights how from an histroric perspective, the rates of tay are nothing special in that they are still lower than at any time from 1990, and if the chart had more historical data, would go back even further would show that it is less than any valueof the cash rate as far back as 1969.
View attachment 162028
Not sure why we are all whinging about rates.
Mick
My view is central banks, globally, are going to prioritise inflation over everything else.If the RBA were doing their research, these figures alone would not give the need to increase rates.
A little further analysis of this data ay ABS Data releaseLooks good at headline level, but when you look down into the detail, a somewhat different picture evolves.
The fall in the unemployment is almost exclusively due to a fall in the participation rate.
In other words, a lot of people have dropped out of the work force.
Oz needs to create about 20k new full time jobs per month to just take up the increase in population due to immigration and natural birth increase.
However, only 6700 jobs were created in September.
If the RBA were doing their research, these figures alone would not give the need to increase rates.
Does not mean they wont of course.
Mick
Heres a visual for those who prefer to see it rather than read it.A little further analysis of this data ay ABS Data release
The 6700 jobs created were as a result of losing 39,900 full time jobs and gaining 46,600 part time jobs.
That is not good sign, and partly explains why the hours worked per person dropped by 0.4%.
The monthly hours worked has now fallen for every month over the last six months.
Looks suspiciously like a trend.
Mick
The Reserve Bank board has lifted interest rates from 4.1 per cent to 4.35 per cent, piling further pressure on struggling mortgage holders as the central bank ramps up its battle to control stubbornly high inflation.
The latest rate hike will add $114 to the monthly interest bill on a $750,000 home loan, bringing the total increase since the RBA began hiking in May to $1815 per month, according to RateCity.
Homeowners with a mortgage of that size will have to find room for an extra $22,000 annually in family budgets which are already stretched by substantially higher cost of living.
In a statement accompanying the decision, RBA governor Michele Bullock said “the board judged an increase in interest rates was warranted today to be more assured that inflation would return to target in a reasonable time frame”.
Ms Bullock also signalled interest rates may need to climb still higher, saying “the board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome”.
“Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable time frame will depend upon the data and the evolving assessment of risks,” she said.
The RBA had held fire for four months as it waited for more information on how the previous dozen rate rises were feeding through to growth, jobs, inflation and spending.
“Inflation in Australia has passed its peak but is still too high and is proving more persistent than expected a few months ago,” Ms Bullock said.
The widely anticipated decision came after a string of data suggested the economy was proving surprisingly resilient to the dozen rate hikes already delivered since May last year, including an unemployment rate that has barely budged from near 50-year lows of 3.5 per cent.
“Since its August meeting, the board has received updated information on inflation, the labour market, economic activity and the revised set of forecasts. The weight of this information suggests that the risk of inflation remaining higher for longer has increased,” she said.
A hot consumer price report for the September quarter since the last RBA board meeting, alongside a surprise reacceleration in retail spending, had made a 13th hike virtually inevitable, economists said.
Additionally, a 10 per cent bounce in property prices since February has returned home values back to their extraordinary pandemic peaks and underlined that monetary policy was not tight enough.
More to come.
We all knew the jump was coming...RBA raises interest rates to 4.35pc, mortgage pain to come
100% no.The RBA hikes interest rates again. But will this be the last one?
The RBA hikes interest rates again. But will this be the last one?
425 basis points worth of rate hikes are in the can. But will there be another 25 before Christmas?www.livewiremarkets.com
+ 100%100% no.
People are struggling yes, but we're not seeing prices come down, people selling big houses to get small houses - or really anything resembling behavior or market changes. People may not like increases but so far my view is that they are coping with them.
Every time I walk into Coles the prices are up, every time I look on the internet prices are up. IDGAF what the government says inflation is completely out of control.
Can't work with logic anymore. I saw the drop in our dollar as well and went...what?/Ya gotta love the markets.
RBA adds a further 25 basis points to the cash rate and the AUD drops 0.8% against the USD.
Ya know it makes sense!.
Mick
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