RBA cash rate

[qldfrog]

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 ' )

Rba will chicken out 0.5% at most

 

[againsthegrain]

Rba will chicken out 0.5% at most

too many cry babies all whining and playing blackmail on rba

 

[CityIndex]

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 ' )

This is a great point. The increased number of opportunities to raise the interest rate could mean that the RBA isn't under as much pressure to tighten as aggressively as some other central banks.

The soft Q2 CPI print did result in traders cooling bets on a 75bps hike this month, with the market now seemingly expecting a third consecutive 50bps. However, the tight labour market, combined with the RBA’s continued shift towards a more hawkish rhetoric, does still add some uncertainty to today’s decision.

 

[divs4ever]

Central Banks usually try rhetoric first ( action if they must )

as long as Australia has a trade surplus it can be more flexible ( the national credit rating will be better than some developed nations )

and an end of year rate of 2.5% or 3% shouldn't stampede the borrowers unless job losses start to explode

i also ASSUME our super funds steadily buy up Aussie Treasuries

 

[waterbottle]

Let's hope they just bring it up to 2%. I won't be able to remember 1.85% ffs

 

[mullokintyre]

Central Banks usually try rhetoric first ( action if they must )

as long as Australia has a trade surplus it can be more flexible ( the national credit rating will be better than some developed nations )

and an end of year rate of 2.5% or 3% shouldn't stampede the borrowers unless job losses start to explode

i also ASSUME our super funds steadily buy up Aussie Treasuries

THE RBA is playing catch up.
They held interest rates low for at least six months too long.
They should have raised by 25 basis points in January, which would have signalled to the market what was about to happen.
They then could have used the monthly meetings to raise by 25 BPS in an orderly fashion.
They are so far behind the curve, I reckon they will go for a minimum of 50 points,.
They need to get interest rates to a minimum of three percent, so that they have room to move when the recession hits.
Then they will most likely hold the up for too long and it starts all over again.
Mick

 

[CityIndex]

The RBA hiked rates by 50bps, taking the cash rate to 1.85% as expected.

Similar to the Fed, the Aussie central bank has also stated that they will continue to monitor incoming data to determine the pace of their tightening cycle.

AUD/USD fell to a new intraday low, while the ASX200 bounced as traders had already been pricing in this decision. All trading carries risk, but it will be interesting to see how the economic data over the coming week's shapes market expectations for the September meeting.

 

[mullokintyre]

So we get 50BPS increase, and what does the market do?
AUD/USD pair dumps 30%.
I can scratch me head as much as I like about why it is that the market reacts with a drop in the AUD when a 50 BPS rise is served up.
I am sure thee will be a volume of reasons as to why there was this outcome, but so far I can't think of any.
Mick

 

[waterbottle]

So we get 50BPS increase, and what does the market do?
AUD/USD pair dumps 30%.
I can scratch me head as much as I like about why it is that the market reacts with a drop in the AUD when a 50 BPS rise is served up.
I am sure thee will be a volume of reasons as to why there was this outcome, but so far I can't think of any.
Mick

AUD and other risk-on assets getting dumped. Crypto down. Possibly due to a Pelosi visiting Taiwan.

 

[mullokintyre]

AUD and other risk-on assets getting dumped. Crypto down. Possibly due to a Pelosi visiting Taiwan.

The problem is, the Pelosi trip has been on the cards for at least two weeks.
If you have a look at the currency chart, you can see the steep dive just before the announcement.
That to me does not look like a reaction to the idea of trisk on/ risk off assets, it looks suspiciously like a reaction to the 50 BPS rate hike.


Mick

 

[waterbottle]

The problem is, the Pelosi trip has been on the cards for at least two weeks.
If you have a look at the currency chart, you can see the steep dive just before the announcement.
That to me does not look like a reaction to the idea of trisk on/ risk off assets, it looks suspiciously like a reaction to the 50 BPS rate hike.
View attachment 144866

Mick

It's the old argument about whether or not the markets are reactive or proactive, forward-looking or not. I don't think anyone knows why it moves...

Market was expecting a 50bps hike. Pelosi's travel plans were known for a while too. AUD isn't the only asset trending down. Oil, ex USD currencies, Asian equities and crypto all down.

 

[CityIndex]

Although risk assets across the board are currently lower, it does seem like local assets are being driven by the RBA Meeting. AUD/USD dropped immediately after the announcement, while the ASX200 has since rallied into the green at the time of writing.

As is sometimes the case, it wouldn't be surprising if this was simply an initial, short-lived, reaction to the RBA matching market expectations. However, given that this decision was already priced in, perhaps traders are putting greater emphasis on Gov. Lowe's post-meeting statement that the board isn't following a pre-set path.

Of course, all trading carries risk, but as global growth concerns rise and inflation shows signs of easing, this could be an indication that the market is repricing for the possibility that the RBA has reached peak hawkishness.

 

[waterbottle]

Although risk assets across the board are currently lower, it does seem like local assets are being driven by the RBA Meeting. AUD/USD dropped immediately after the announcement, while the ASX200 has since rallied into the green at the time of writing.

As is sometimes the case, it wouldn't be surprising if this was simply an initial, short-lived, reaction to the RBA matching market expectations. However, given that this decision was already priced in, perhaps traders are putting greater emphasis on Gov. Lowe's post-meeting statement that the board isn't following a pre-set path.

Of course, all trading carries risk, but as global growth concerns rise and inflation shows signs of easing, this could be an indication that the market is repricing for the possibility that the RBA has reached peak hawkishness.

Very possible. The BNPL sector has rallied since the announcement. Although difficult to interpret with NASDAQ futures down at present and other risk assets down.

 

[divs4ever]

THE RBA is playing catch up.
They held interest rates low for at least six months too long.
They should have raised by 25 basis points in January, which would have signalled to the market what was about to happen.
They then could have used the monthly meetings to raise by 25 BPS in an orderly fashion.
They are so far behind the curve, I reckon they will go for a minimum of 50 points,.
They need to get interest rates to a minimum of three percent, so that they have room to move when the recession hits.
Then they will most likely hold the up for too long and it starts all over again.
Mick

i doubt they will catch up at their current rate , i am thinking they will try for 5% so they can cut in the next financial crisis

i doubt they will get to 6% before 'official ' inflation is closer to 10%

expect them to 'tweak ' the CPI again to lull us into lower wage hikes ( and probably bump up super contributions so the super funds buy more treasuries )

 

[Gunnerguy]

We all look for/at the complex aspects. Personally and simply I believe the market expected 50bps, but had some concern it would surprise at 75bps. It was 50 so ‘they’ we relieved and had a bit of a ‘relief’ rally. That’s all.

Gunnerguy

 

[frugal.rock]

I feel sorry for the bunnies that believed Lowe 10 months ago, when he said rates would stay at the lows until at least 2024. The sad side of that is the defaults that are just a little ways down the track.

Sure, Ukraine came along and hastened the rate of inflation, but heck, it was out of control well before then.

Bring on the recession, as it's another one we are going to have to have....

In my opinion, the RBA needs to be more fluid in reaction and use better indicators. He who hesitates is lost, type scenario.
They seem to only have red and green lights, stop and go, where's the amber been?

 

[Smurf1976]

Sure, Ukraine came along and hastened the rate of inflation, but heck, it was out of control well before then.

The war seems to be being used as a convenient excuse for rather a lot of problems that existed even without it.

Just an observation.

 

[divs4ever]

We all look for/at the complex aspects. Personally and simply I believe the market expected 50bps, but had some concern it would surprise at 75bps. It was 50 so ‘they’ we relieved and had a bit of a ‘relief’ rally. That’s all.

Gunnerguy

that was how i was reading it as well ,

will be watching to see if the XJO can close above 7,000 today

 

[divs4ever]

The war seems to be being used as a convenient excuse for rather a lot of problems that existed even without it.

Just an observation.

that is what has happened several times before , and at least two analysts ( a fair while before ) had declared that normal fiscal measures would not get them out of the stress the global economy ( circa 2019 , i believe ) had found itself in

 

[divs4ever]

I feel sorry for the bunnies that believed Lowe 10 months ago, when he said rates would stay at the lows until at least 2024. The sad side of that is the defaults that are just a little ways down the track.

Sure, Ukraine came along and hastened the rate of inflation, but heck, it was out of control well before then.

Bring on the recession, as it's another one we are going to have to have....

In my opinion, the RBA needs to be more fluid in reaction and use better indicators. He who hesitates is lost, type scenario.
They seem to only have red and green lights, stop and go, where's the amber been?

might be time for the #endtheFed campaign to extend to the RBA as well