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Do you think the Interest rate is going to go down any further?
Do you think the Interest rate is going to go down any further?
Think they will be 10% soon, and house prices will crash 50%...
In short term, stay same, with rise around jan-may 2010. I reckon late 2010 will see cash rate back @ 400bps.
Just my opion, but no 1 really knows...
Cheif Economist of Westpac Bill Evans suggested that rates were likely to come down 50 bp in august in last nights post bugdet dinner.
I think he was referring to the RBAs Cash Rate, and not the banks Standard Variable Rate.Cheif Economist of Westpac Bill Evans suggested that rates were likely to come down 50 bp in august in last nights post bugdet dinner.
Cheif Economist of Westpac Bill Evans suggested that rates were likely to come down 50 bp in august in last nights post bugdet dinner.
...The bottom line is that RBA cuts are a less relevant than they used to be, it's the margin the banks choose to charge that is going to be main influencer of SVRs in the short to medium term...
Yes, it has a little. I believe it needs to keep some powder dry for when unemployment gets above 7.5%.The RBA still has a little bit of room left. So, for example, if they wanted market rates to drop by 50bp, couldn’t the RBA drop the cash rate by 100bp and achieve their aim?
However, when the RBA cash rate gets down to ~2% it becomes ineffective - banks are unable to offer depositors a reasonable return. And deposits is where much of bank funding comes from. So any RBA rate cuts from here onwards lose a lot of their impact.
Dropping the cash rate by 100 bps, would leave the RBA with nothing. The banks may follow with 50bps.... then what. They're both stuck between a rock & a hard place, neither have any room to move.
Jeez Nathan, you still hanging around here? You were due to crash and burn ages ago were'nt you??!!!
For what it's worth, I reckon another small drop or two, though I think fixed rates have seen the bottom. Part of me hopes RBA don't drop anymore as I can see things picking up next year and will only mean they have to raise rates quicker and harder.
We've had 400bps of cuts from the RBA & ~375bps have been passed on to the SVR. The RBA only has 100bps left, and the banks are unlikely to pass on more than half (IMO). So we've had ~85% of the cuts we're going to get.In light of your thinking that there is little the RBA can effectively do to stimulate the economy, how do you feel about Alan Kohler's "Over to you Glenn" article?
Over to you Glenn: http://www.businessspectator.com.au/bs.nsf/Article/Over-to-you-Glenn-pd20090513-RYS6P?OpenDocument
And the followup: http://www.businessspectator.com.au...eal-centrepiece-pd20090513-RYSG3?OpenDocument
If I have it right, Kohler thinks that the government is leaving it to the RBA to stimulate the economy (rather than doing it directly) by dropping rates further, with the expectation that when the "rebound" comes we'll be busily producing exports with low funding costs.
But you are suggesting there is not much further that banks will drop rates?
... then I feel he hasn't offered much to substantiate that view. The RBA doesn't care that much about the govt returning to surplus when it forecasts it will, it's job it to ensure inflation & growth stay reasonable. I'd watch for another article from him stating that IRs could rise before inflation gets grip.The quick resumption of growth next year and boom conditions in the following years that Treasury has assumed, depend entirely on further interest rate cuts – by at least 1 per cent more to a 2 per cent cash rate or less.
Without that there is no possibility of the government's medium fiscal strategy of a return to surplus this side of Armageddon being met.
The RBA will be powerless & it'll be up to the govt to throw some more $$$ our way. However, looking at various market indicators and the lack of talk about a Depression in the press seems to indicate that the RBA won't be put in that position.What happens if/when the RBA is out of ammo and things don't turn around in 2010?
We've had 400bps of cuts from the RBA & ~375bps have been passed on to the SVR. The RBA only has 100bps left, and the banks are unlikely to pass on more than half (IMO). So we've had ~85% of the cuts we're going to get.
We've had 400bps of cuts from the RBA & ~375bps have been passed on to the SVR. The RBA only has 100bps left, and the banks are unlikely to pass on more than half (IMO). So we've had ~85% of the cuts we're going to get.
The RBA will be powerless & it'll be up to the govt to throw some more $$$ our way. However, looking at various market indicators and the lack of talk about a Depression in the press seems to indicate that the RBA won't be put in that position.