Will Interest Rates Rise in June?
- Thread starter dennisll
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I don't expect rates to rise in June but another rise is on the way later this year IMO. Could be any time from July on. I think one 0.25% rise is pretty certain with another rise (taking rates to 6.25%) later this year being a distinct possibility.
We're about to find out if the finances of home buyers with huge loans and variable rate mortgages are really as robust as real estate bulls claim. I suspect they're not and that quite a few mortgagee sales are on the way. It wouldn't take much of a shift in the balance of buyers / sellers of real estate to send prices down IMO. More sellers, some of them in a big hurry, whilst buyers can borrow less and are worried about future interest rate rises... Time will tell.
We're about to find out if the finances of home buyers with huge loans and variable rate mortgages are really as robust as real estate bulls claim. I suspect they're not and that quite a few mortgagee sales are on the way. It wouldn't take much of a shift in the balance of buyers / sellers of real estate to send prices down IMO. More sellers, some of them in a big hurry, whilst buyers can borrow less and are worried about future interest rate rises... Time will tell.
wayneL
VIVA LA LIBERTAD, CARAJO!
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I think they "should" raise by .5
I doubt they'll have the cajones' to raise at all.
So I split the difference .25%
I doubt they'll have the cajones' to raise at all.
So I split the difference .25%
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Im with smurf; I think they will go up that quarter pc but not just yet. Just wait til the poop hits the propeller in the states though.....
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It all points up for another rate rise... of at least 0.25%
* Inflation on upper level of the target band
* Food prices rising rapidly
* House prices in almost all parts of Australia are still rising
* Petrol prices still heading north which will put pressure on CPI
* Borrowing/Lending still at record levels and rising
* Globally upward trend to raise rates...
Please inform me if I am wrong, but its up from here!
* Inflation on upper level of the target band
* Food prices rising rapidly
* House prices in almost all parts of Australia are still rising
* Petrol prices still heading north which will put pressure on CPI
* Borrowing/Lending still at record levels and rising
* Globally upward trend to raise rates...
Please inform me if I am wrong, but its up from here!
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I'd be surprised if the RBA lifted rates in June, but I feel another rate rise towards the end of year is likely.
How many years do others feel it will take before rates start to decline? The last australian cycle with rates increasing lasted from 11/99 until 2/01.
I feel the current climate could last a little longer perhaps?
How many years do others feel it will take before rates start to decline? The last australian cycle with rates increasing lasted from 11/99 until 2/01.
I feel the current climate could last a little longer perhaps?
Realist
Billie Jean is not my lover
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I said yes by 0.25, but June is a bit early. August would be my guess.
Interests rates have a faire bit further to go IMHO. At least 1 point.
I'll be waiting to buy a house when interest rates are at their highest
Interests rates have a faire bit further to go IMHO. At least 1 point.
I'll be waiting to buy a house when interest rates are at their highest
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Up a full 1%? Not a high rate by any means but just wait for all those "I borrowed as much as I could get and didn't bother with a fixed rate and now I can't afford a holiday or new car... it's so unfair" stories on ACA and TT. 
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Its a sure thing a rise is on its way!
Inflation pressures building:
By Caroline Adam
05jun06
INFLATION pressure is building in Australia after a measure of consumer prices rose for the third month in a row, pushing annual inflation above the central bank's target range, a gauge shows.
The TD Securities-Melbourne Institute monthly inflation gauge found prices of consumer goods and services climbed 0.3 per cent in May, after increases of 0.4 per cent in April and 0.3 per cent in March.
In the 12 months to May the gauge grew by 3.2 per cent.
After reaching a low of 2.6 per cent in March this year, the gauge's measure of year-ended inflation had accelerated and was now above the Reserve Bank of Australia's (RBA) 2-to-3-per-cent target band.
"It is disconcerting to observe that underlying inflation jumped to 3.2 per cent in May from levels around 2.5 per cent earlier in 2006," TD Securities chief strategist Stephen Koukoulas said.
"Underlying inflation is now above the most recent forecast from the RBA that was published in its May statement on monetary policy.
"If this rate of underlying inflation is sustained in the months ahead, it will all but guarantee a further interest rate rise before year-end."
The trimmed mean of the inflation gauge – a measure of underlying inflation – rose by 0.3 per cent in May, following a rise of the same size in April.
In the year to May the trimmed mean grew by 3.2 per cent.
Mr Koukoulas said the monthly inflation data was sending a timely warning to the RBA and markets that inflation pressures were uncomfortably high.
"The problem the RBA confronts in dealing with the inflation pickup is likely to be magnified by the income tax cuts and extra government spending announced in the budget," he said.
"If this boost to incomes and activity allows firms to pass on higher input costs to final selling prices, there is a risk that the RBA may need more than one interest rate hike before it can be sure inflation is under control."
Contributing most to the overall increase in the inflation gauge in May were rises in the cost of automotive fuel, holiday travel and financial services.
Decreases in audio, visual and computing, and telecommunication partially offset these increases.
Inflation pressures building:
By Caroline Adam
05jun06
INFLATION pressure is building in Australia after a measure of consumer prices rose for the third month in a row, pushing annual inflation above the central bank's target range, a gauge shows.
The TD Securities-Melbourne Institute monthly inflation gauge found prices of consumer goods and services climbed 0.3 per cent in May, after increases of 0.4 per cent in April and 0.3 per cent in March.
In the 12 months to May the gauge grew by 3.2 per cent.
After reaching a low of 2.6 per cent in March this year, the gauge's measure of year-ended inflation had accelerated and was now above the Reserve Bank of Australia's (RBA) 2-to-3-per-cent target band.
"It is disconcerting to observe that underlying inflation jumped to 3.2 per cent in May from levels around 2.5 per cent earlier in 2006," TD Securities chief strategist Stephen Koukoulas said.
"Underlying inflation is now above the most recent forecast from the RBA that was published in its May statement on monetary policy.
"If this rate of underlying inflation is sustained in the months ahead, it will all but guarantee a further interest rate rise before year-end."
The trimmed mean of the inflation gauge – a measure of underlying inflation – rose by 0.3 per cent in May, following a rise of the same size in April.
In the year to May the trimmed mean grew by 3.2 per cent.
Mr Koukoulas said the monthly inflation data was sending a timely warning to the RBA and markets that inflation pressures were uncomfortably high.
"The problem the RBA confronts in dealing with the inflation pickup is likely to be magnified by the income tax cuts and extra government spending announced in the budget," he said.
"If this boost to incomes and activity allows firms to pass on higher input costs to final selling prices, there is a risk that the RBA may need more than one interest rate hike before it can be sure inflation is under control."
Contributing most to the overall increase in the inflation gauge in May were rises in the cost of automotive fuel, holiday travel and financial services.
Decreases in audio, visual and computing, and telecommunication partially offset these increases.
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I think rates will rise another 25bp in June.
The RBA raised rates last month because of inflation concerns and imo last month's 25bp rise will not have much affect on its own but another 25bp rise this month totalling a 50bp rise will imo start to affect consumer spending and so help keep a lid on inflation.
And I also think that unless new inflation concerns for the RBA emerge then they will most likely sit on their hands in July and adopt a wait and see approach.
cheers
bullmarket
The RBA raised rates last month because of inflation concerns and imo last month's 25bp rise will not have much affect on its own but another 25bp rise this month totalling a 50bp rise will imo start to affect consumer spending and so help keep a lid on inflation.
And I also think that unless new inflation concerns for the RBA emerge then they will most likely sit on their hands in July and adopt a wait and see approach.
cheers
bullmarket
bullmarket said:I think rates will rise another 25bp in June.
The RBA raised rates last month because of inflation concerns and imo last month's 25bp rise will not have much affect on its own but another 25bp rise this month totalling a 50bp rise will imo start to affect consumer spending and so help keep a lid on inflation.
And I also think that unless new inflation concerns for the RBA emerge then they will most likely sit on their hands in July and adopt a wait and see approach.
cheers
bullmarket
IMO consumer spending has already been affected by petrol price rises
RBA should wait and see the affects of the 25bps rate rise in may before making any other moves
of course the argument is there that high petrol prices will affect consumer spending but that this is countered by the tax breaks announced at the recent federal budget
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