RBA cash rate

[mullokintyre]

The banks would prefer not to have to borrow offshore as it introduces currency risk that they would not incur in country of origin.
But if the risk reward is ok, i.e. its cheaper to borrow off shore and wear the currency risk, that is what they will do.

Mick

 

[Macquack]

The RBA surprised markets with their decision yet again, seems like not many were expecting the cash rate to be lifted 0.5%.

Lowe must have finally off loaded his last investment property.

 

[mullokintyre]

The RBA surprised markets with their decision yet again, seems like not many were expecting the cash rate to be lifted 0.5%.

Perhaps 50bps rate hikes are becoming the new norm with major central banks, in which case both AUD and the ASX200 may potentially be in for some repricing building up to the July meeting.

Is it a case of Lowe being contrary and just trying to confuse the market?
Why now, why 50BPS?
Why not give a couple of 25 BPS raises before Christmas?
Have the metrics really changed so much since then, or was it just a case of confirmation?
Be interesting to the see the minutes.
Mick

 

[divs4ever]

Is it a case of Lowe being contrary and just trying to confuse the market?
Why now, why 50BPS?
Why not give a couple of 25 BPS raises before Christmas?
Have the metrics really changed so much since then, or was it just a case of confirmation?
Be interesting to the see the minutes.
Mick

there was speculation the RBA would have rates between 2.5% and 3% by December this year

now the wild card here is bond yields , but don't neglect a potential tamper tantrum ( like we had in 2018 )

remember before this 'new era of economics ' to reduce inflation ( CPI ) the cash rates needed to be equal or higher , so in the past 3% cash rate did little to slow down 8% CPI rises

and what if those that claim REAL inflation is at least twice that of the CPI are correct

 

[CityIndex]

Perhaps the RBA felt like following in the footsteps of other major central banks, echoing the 50bps rate hike seen by the Fed, BoC, and RBNZ in recent weeks.

This has also opened the possibility for a more aggressive tightening cycle from the RBA over the coming months, and when coupled with the prospect of slowing growth, this could weigh heavily on the equity market.

The ASX200 has dropped 100 points today for the second time this week, and could be track for a retest of range lows below 7000 in the coming weeks.

All trading carries risk, but it will be interesting to see how this shapes up.

 

[mullokintyre]

I have been critical of the RBA baord in the past, but the latest attempts to "improve" the RBA smacks of power grabbing.
From ABC news

Federal Treasurer Jim Chalmers has thrown his support behind calls for the Reserve Bank (RBA) board to be more representative of the broader Australian community, following scathing criticism that it is out of touch with workers demanding wage increases.

Key points:​

• Treasurer Jim Chalmers has already committed to a review of the RBA
• But the terms of reference are still being finalised
• He says one of the key considerations going forward is "to also make sure that the right voices are represented around the table"

During the week, ACTU Secretary Sally McManus took aim at RBA governor Philip Lowe, accusing him of indulging in a "boomer fantasy" in warning that wage growth beyond 3.5 per cent would further fuel inflation across the country.

Ms McManus's assessment extended to the RBA board, when she argued there were no members with experience "in negotiations for wages, or the wage setting system from the workers' side."

"Now, that's a pretty big problem if you're making assumptions or trying to understand, trying to analyse how things work," she told the ABC on Thursday.

Well, I am not sure if the good Sal is aware or not, but the RBA does not set wages.
The only thing it sets is the cash rate, plus the ability to force the OZ banks keep a certain volume of money as capital, rather than lending it all out.
It cannot force the banks to either raise or lower rates in sync with the rates it sets.
As to the idea that Chalmers wants "to also make sure that the right voices are represented around the table", that is fraught with danger.
We would need to have at leat 50 percent women, representatives from first nations people, representatives from the LGBTI+- community,
people from non English speaking backgrounds, union reps, the tennants union, experts from the media, academic experts, self employed reps, and possibly someone from big business as well. And then theres the rest of us.
The board would end up needing the entire surface of the MCG to meet.
Mick

 

[divs4ever]

I have been critical of the RBA baord in the past, but the latest attempts to "improve" the RBA smacks of power grabbing.
From ABC news

Well, I am not sure if the good Sal is aware or not, but the RBA does not set wages.
The only thing it sets is the cash rate, plus the ability to force the OZ banks keep a certain volume of money as capital, rather than lending it all out.
It cannot force the banks to either raise or lower rates in sync with the rates it sets.
As to the idea that Chalmers wants "to also make sure that the right voices are represented around the table", that is fraught with danger.
We would need to have at leat 50 percent women, representatives from first nations people, representatives from the LGBTI+- community,
people from non English speaking backgrounds, union reps, the tennants union, experts from the media, academic experts, self employed reps, and possibly someone from big business as well. And then theres the rest of us.
The board would end up needing the entire surface of the MCG to meet.
Mick

but it is the RBA 'data ' and political expediency that have a BIG part in wages rises ( sure the smart employers negotiate with the employees directly , and help them resist union membership ) but some management are just dumb and the disgruntled workers are easy pickings for the parasitic unions so you have the unions on one side , the employers on the other and the politicians trying to look important in the middle .

and the 'right voices' do NOT generally come from the best minds ( we have several parliament houses in Australia to prove that )

all i can say to the youngsters is .. please remember how you got into the mess ( that is coming )

and back when i was much younger the BIG banks sourced the majority of their funding inside Australia so were influenced by the RBA rates to a greater extent , since then there has been a trend to source more funding internationally , with all the perils that brings ( i hope those globe-trotting banks don't expect the Australian taxpayer to bail them out again )

 

[CityIndex]

At the time of writing, both the ASX200 and AUD/USD are trading just off session highs with today's RBA meeting in focus.

Governor Lowe al-but-confirmed that the RBA would follow the Fed’s lead and raise rates by 75bps, with the market now widely expecting another 50bps hike Aussie central bank due to a strong Retail Sales print for May as well as persistent inflation around the world;

However, all trading carries risk, and Gov. Lowe did say that the board will consider 25bps. Either way, it will be interesting to see how markets react with the decision around 2 hours away as any deviation in either direction is likely to result in elevated volatility.

 

[Garpal Gumnut]

I have been critical of the RBA baord in the past, but the latest attempts to "improve" the RBA smacks of power grabbing.
From ABC news

Well, I am not sure if the good Sal is aware or not, but the RBA does not set wages.
The only thing it sets is the cash rate, plus the ability to force the OZ banks keep a certain volume of money as capital, rather than lending it all out.
It cannot force the banks to either raise or lower rates in sync with the rates it sets.
As to the idea that Chalmers wants "to also make sure that the right voices are represented around the table", that is fraught with danger.
We would need to have at leat 50 percent women, representatives from first nations people, representatives from the LGBTI+- community,
people from non English speaking backgrounds, union reps, the tennants union, experts from the media, academic experts, self employed reps, and possibly someone from big business as well. And then theres the rest of us.
The board would end up needing the entire surface of the MCG to meet.
Mick

I would be happy to put my hat in the ring to represent the miserable, raucous and disreputable who make up the membership of Aussiestockforums, on the board of the RBA.

Is one allowed smoke cigars, swallow mullet roesack, drink champagne and have one's PA on one's knee during meetings or is it Lenten Rules ?

I'm ok with Lenten Rules if the expense account is appropriate to a person of my standing.

gg

 

[Dona Ferentes]

Got my vote, gg.

Either 50 or 65 basis points, are my guesses

 

[divs4ever]

i went ( earlier ) for 0.5% ( with a slight chance of 0.4% )

good luck

 

[divs4ever]

*DJ Australia's RBA Raises Cash Rate Target 50 Bps to 1.35%
05 Jul 2022 14:30:16

 

[divs4ever]

remember our RBA gets more opportunities to raise than some other Central Banks

 

[CityIndex]

AUD/USD tumbled while the ASX200 rallied after the RBA's interest rate decision matched expectations. The pair put in new session lows following the news, and is currently still down 0.24%.

This could be stemming from traders speculating that we have seen peak hawkishness from the RBA as well, but it will be interesting to see how much of a sustained impact this actually has on the markets.

 

[Gunnerguy]

RBA tomorrow needs to raise by 75 bps.
What do you think they will do tomorrow ?

Gunnerguy

 

[macca]

RBA tomorrow needs to raise by 75 bps.
What do you think they will do tomorrow ?

Gunnerguy

50 is my pick

 

[Knobby22]

Not many more left.
Expectation is falling rapidly and now a fall is expected late next year.

 

[greggles]

I don't think the RBA will tighten the screws too much. The public outcry from the over-leveraged - of which there are many - will become too great and the RBA will ease off.

I think there's maybe another percentage point in rate rises to come this year, but I don't see them going any higher than that. Personally I think that the rate increases to date have likely had a significant impact on discretionary spending already.

 

[gartley]

The over leveraged better used to higher long term IR. After this impulse up completes in the months ahead and we get a wave 2 multi month pullback, they will get one last chance to lock in at lower rates before wave 3 starts...

 

[divs4ever]

since the RBA has more opportunities per year to tighten( or relax ) than most other nations

i am sticking with 0.5% as mostly likely and a slight chance of only 0.4% ( to round out the official rate )

we are well behind the official CPI ( and i doubt they have the courage to lift it 5% in one jump ) and even further behind 'felt price increases '

they are still whistling in the wind , but SO FAR Australia is still generating trade surpluses ( but of course we will eventually enter a trade war with China and we missed the opportunity to create strong trade partnerships with India or even Mexico ) we can carry on with the clown show until China starts flexing it's muscles ( and halts investments in 'unfriendly nations ' )