RBA cash rate

[grandia3]

G'day people

with RBA meeting due next Tuesday,
any takers on what their cash rate decision will be?

IMO, taking into account the recent flood, increase in cash rate is unlikely
but, economists sometimes surprise us

 

[c-unit]

I'll say 25bp rise, as inflationary expectations are over 4%

 

[tothemax6]

My prediction for Tuesday: no change.

 

[Julia]

but, economists sometimes surprise us

I can't think of many predictions of economists that have actually been right over the last few years. I'm a bit surprised that, after their multiple failures, they're still so keen to put their forecasts out there.\
Imo there's no chance of an increase in rates at the Feb meeting.
But just wait until the increased food prices have happened in earnest, and the building recovery after the floods is in full swing, and whacko, up they will go again.
Miners will probably also be functional again by this time.

Tough on the so called Aussie battler who will be facing increased cost of living plus likely another rise in mortgage payments.

 

[drsmith]

No change.

One reason to me could the RBA waiting see the government's fiscal management strategy in relation to flood recovery.

 

[grandia3]

the government's fiscal management strategy.

true, rebuilding after the flood could cause inflation
I'm expecting the cash rate will raise eventually

 

[tothemax6]

As predicted, no change. Bets on when next change will occur?

 

[jbocker]

With the AUD going past $1.10US, what effect would an interest rate rise (today) have on the AUD?
There was some talk a week or two ago that there could be a cash rate rise with the inflation numbers, but I think it is very unlikely now.
The banks may independently drop the rates too was a report I saw a little while ago too, but maybe I was dreaming.
Additionally the pending budget would quell any decision to change the rate.

Maybe Glenn Stevens will cancel the meeting.

 

[jbocker]

no real surprise...

At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent. And the reasoning can be found here...
http://www.rba.gov.au/media-releases/2011/mr-11-07.html

 

[drsmith]

The RBA faces a difficult decision on Tuesday.

http://www.businessspectator.com.au...une-qtr-pd20110727-K63B2?OpenDocument&src=hp2

Do they throttle further an already weak domestic economy or abandon their 2-3% underlying target ?

 

[tinhat]

To a certain degree they will blame it on the price of bananas (ie, abnormal cost pressures due to the natural disasters).

Nostro-stannum says... No change this week!!!

 

[jbocker]

Likely to be no change, after thoughts there could be a drop earlier in the month.
I like checking on this site! ...

http://www.asx.com.au/sfe/targetratetracker.htm

 

[drsmith]

If the RBA does not raise rates today, it's commentary will make for interesting reading given June quarter inflation was worse than expected.

RESERVE Bank governor Glenn Stevens delivered some hugely important messages yesterday. Ahead of this morning's inflation figures, on which next week's RBA interest rate decision pivots.

The most immediate message he delivered is that the collective you - Australian households - might just have saved yourself out of a rate rise. Absent some (unlikely) shockingly high inflation number.

Simply and brutally, that the RBA would have to slow the rest of the economy in order to "make way" for the huge investment spending of the resources boom. And it would do so, by raising rates.

http://www.heraldsun.com.au/busines...-americans-spend/story-e6frfig6-1226102302851

 

[drsmith]

The RBA held off raising the cash rate citing uncertainty in global financial markets over recent weeks.

At today's meeting, the Board considered whether the recent information warranted further policy tightening. On balance, the Board judged that it was prudent to maintain the current setting of monetary policy, particularly in view of the acute sense of uncertainty in global financial markets over recent weeks. In future meetings, the Board will continue to assess carefully the evolving outlook for growth and inflation.

They won't be able to hold that line for long, unless that uncertainty in global financial translates into the global economy itself going pear shaped.

 

[tothemax6]

So inflation hits 3.8% and they leave the cash rate steady. What the hell kind of metric is 'we feel there is uncertainty in financial markets' when your rules dictate keep inflation below 3%?
If even the AUD is not to be trusted I will have to increase my gold holdings.

 

[drsmith]

Another cut today of 0.25% to a cash rate of 3%.

Something our political leaders should note,

Key commodity prices for Australia remain significantly lower than earlier in the year, though trends have been more mixed over the past few months. The terms of trade have declined by about 15 per cent since the peak, to a level that is still historically high.

http://www.rba.gov.au/media-releases/2012/mr-12-36.html

 

[Joules MM1]

Another cut today of 0.25% to a cash rate of 3%.

Something our political leaders should note,



http://www.rba.gov.au/media-releases/2012/mr-12-36.html

and another one
http://www.theaustralian.com.au/bus...127ac30f051b51127a63c7d2#.UL1yF-SHv-E.twitter

 

[Julia]

One of many similar comments on various websites following today's rate cut:

The RBA only has one instrument ie interest rates and the bad news is that in this environment it just isnt an effective tool. Firstly only a modest percentage of households have significant variable mortgages. When rates fall, they dont rush out and spend the savings, they sensibly simply maintain the repayments to pay down quicker and save interest (tax free). Their numbers are probably offset by the retirees who depend on interest income and suffer an effective "drop in pay" and are forced to spend less.

Low interest rates don't seem to have been particularly effective for the US or Japan.

 

[Country Lad]

Low interest rates don't seem to have been particularly effective for the US or Japan.

Nor here by the looks of it. As soon as the cut was announced, the market fell and the dollar went up - go figure.

 

[Dona Ferentes]

rates on hold, at 0.75%.

Markets are pricing in a 50% chance of cut in March (!?)