Interest Rates

[Frezzinghot]

The Reserve Bank of Australia kept the cash rate unchanged at a record low of 0.1% during its July meeting, as widely expected. Policymakers also held its yield curve control program at the April 2024 bond maturity of 10 bps; and decided to extend its current bond-buying programme to at least mid-November, but reduce the amount purchased to A$4 billion a week, from the current A$5 billion. The central bank reaffirmed its commitment to achieving full employment and inflation consistent with the target. Policymakers also reiterated that they will not increase the cash rate until actual inflation is sustainably within the 2 to 3% target range. The RBA's scenario for the economy is that this condition will not be met before 2024

So will we follow is the next question? I have a crap load coming off in 3 months so be nice if it reduced further

[Jeffa]

US government bonds rallied on Tuesday, pushing the 10-year yield to the lowest level in four months, as investors unwound bets for tighter monetary policy and reacted to a disappointing survey on the services sector.

[JBM]

The Reserve Bank of Australia kept the cash rate unchanged at a record low of 0.1% during its July meeting, as widely expected. Policymakers also held its yield curve control program at the April 2024 bond maturity of 10 bps; and decided to extend its current bond-buying programme to at least mid-November, but reduce the amount purchased to A$4 billion a week, from the current A$5 billion. The central bank reaffirmed its commitment to achieving full employment and inflation consistent with the target. Policymakers also reiterated that they will not increase the cash rate until actual inflation is sustainably within the 2 to 3% target range. The RBA's scenario for the economy is that this condition will not be met before 2024

Yes and neither will RBNZ ,,, but they will talk it up... they got BANKs to push longer term rates higher to try and scare the retailers >> spec market .. watch out !! rates going higher ... but no RBNZ,ASB,BNZ you are full of crap and anyone with any basic financial sense can see it >>

Don't be fooled into taking anything higher than the lowest rates you can secure ..forget the term as rates aren't going higher in more than token amounts.... 2.19% to 2.29% 1yr fixed etc

Aus rates 5yr fixed 2.3%

https://mozo.com.au/home-loans/interest-rates

2.87% 5yr from ANZ in AUS

https://www.anz.com.au/personal/home-loans/offers-and-rates/

[Jeffa]

A balanced story finally.


"ANZ sees chance official cash rate may go up in August but Jarden says calm the f*%$k down"



"Jarden analyst John Carran believed expectations of interest rate rises were getting ahead of themselves.

The Reserve Bank would be cautious about raising rates too far ahead of the United States Federal Reserve and the Reserve Bank of Australia because of the impact that could have on the dollar, he said.

There was also a possibility that inflationary pressures might recede without early action from the Reserve Bank, he said.

Carran believed there was only a low chance that the Reserve Bank would raise the rate before May.

Past experience had been that supply-side constraints in the economy tended to result in only short-term inflation, he said"

ANZ Satanic mouthpiece said


Zollner said that even though it was possible “something bad might happen”, such as a lockdown next week, “you have got to ask yourself if we are doing ourselves any favours by encouraging people to take more risk and borrow more money now?”

"The lesson from the past had been “don’t hike too late, because then you end up having to hike more”, she said."

Some points she forgot to mention:

ANZ just tapped half a billion from the RBNZ Funding for lending program to help "provide competitive lending to the productive parts of the economy' including mortgage lending but don't tell no one.

The last time they hiked the OCR in 2014 they had to lower it 12 months later..so much for turning New Zealand into a high wage economy.

I'm a shareholder of ANZ..why do I want those idiots losing profits by being responsible and looking after customers?.. because there not, there trying to keep me happy so I don't sell my shares.

If interest rates fall again in 12/24 months I'm exiting my position in the bank's because it's pretty much over for them when the RBNZ introduces there CBDC.

https://www.stuff.co.nz/business/125...n-says-cool-it

[Jeffa]

Yeah it doesn't make sense, according to the bank's and media inflation is only for the bottom 20%

Most kiwi's have been screaming out for a higher wage economy but as soon as there's any sign of inflation they want to stop it in it's tracks.

If the RBNZ has any balls, they need to do what the RBA and the Federal reserve are going to do and let inflation run above 3 or 4% . This with help with wage inflation and push there economies ahead.

If we jump on inflation to soon we're likely to fall even further behind Oz in income earnings.

RBNZ should already know this and understand raising the OCR only benefits the retail bank's and shareholders profit margin..it doesn't mean house prices are going to fall 30%.

I don't agree with most of Bernard Hickeys ideology but we both agree on this.

Bernard Hickey:

view: The Reserve Bank should let the economy’s engine race to blow out the cobwebs of very subdued wage growth and to get some inflation heat back into the economy so interest rates can be normalised at a higher level. The risk is that at the moment it may jump too early and embed expectations below 2%.

Its last set of forecasts showed it planned to hike from mid 2022 and that inflation would only get above 2% later in 2023 (see chart below). Economists now expect the first rate hike in November after a run of good economic figures and signs of skill shortages in the jobs market.

However, there are doubts this will continue overseas. US and European stocks fell as much as 2% overnight and the US 10 year Treasury bond yield fell to another four-month low of 1.27%. The German 10 year bund fell 3 bps to minus 0.323%. Fresh waves of delta variant Covid are now racing through well-vaccinated developed economies, slowing activity again, while China announced this week it may ease monetary policy because of a slowdown in its rebound.

New Zealand risks jumping well ahead of its peers and before inflation is well bedded in. This would push the NZ dollar further up well over 70 USc and risk stalling export growth.

Some may argue that lower interest rates for longer would put even more pressure on the housing market, which is true, but the Reserve Bank should use its LVR and new DTI tools to offset that pressure by further restricting riskier lending, rather than putting a squeeze on exporters and businesses.

[donna]

^^ Yeah what happened to the DTI?

[chook]

Inflation (rising prices & interest rates) Deflation (falling prices & values) Stagflation ( rising unemployment and rising inflation)

Pick a card ..any card..

First one off the rack is inflation (now), next massive deflation ending in prolonged stagflation..Have a nice day!

[Jeffa]

First one off the rack is inflation (now), next massive deflation ending in prolonged stagflation..Have a nice day!

Agree

If these "experts" put in charge decide to raise the OCR from political pressure, so Molly and Manu can carry on buying a $1 bread instead of a $1.50 loaf the repercussions of that will be.

Lower wage inflation
Stronger Kiwi Dollar
Weaker exports
Lower Growth
Higher unemployment
Stagnant economy

To hedge against this I will continue using the favourably exchange rate to invest in stronger economies like the US and Australia who have stated they won't raise their OCR until 2023.

Almost 2 years to have my wealth grow before exchanging it back to a weaker kiwi dollar.

And how will the NZ economy do in that time?..who cares.

[Jeffa]

The European Central Bank has changed its inflation target to allow extra room to keep there interest rates low ...why is New Zealand even considering raising the OCR?

[donna]

^^ pressure from banks so they can rise their lending interest rates?

[Hound]

Rates will continue to go up/down. Up goes the five year, down goes the one year "special" So overall they aren't really going up at all, when most borrowers go for the one year. And good on them for seeing through the spin!

[chook]

And more,... forget 2023 &2022 rate rises will happen this year..

https://fortune.com/2021/06/16/feder...flation-rises/

A..hem, A..hem, its starting folks..

https://www.interest.co.nz/personal-finance/111285/run-lower-and-lower-mortgage-rates-may-be-ending-major-asb-pushing-through

[Perry]

It's happened before - where they got it so wrong they had to reverse the rate increase, not long afterwards. Mainly because other banks did not follow, as I recall.

It's quite silly calling a 0.3% increase a "hike." The financial airheads seem to love the implied exaggeration in using the figure 30bps. Sounds so much worse than 0.3%

[Jeffa]

A..hem, A..hem, its starting folks..

https://www.interest.co.nz/personal-...ushing-through

Although not a huge increase I'll be listening to the RBNZ today for there view

NZD still flat this morning waiting for word from Orr on there direction.

Any upward talk on rates and I'm betting against the kiwi dollar.

If the NZD goes above 75c I'm shorting the shit outta it..if we're the first to move up will be the first to crash our dollar because they have it wrong.. inflation is transitory.

[Jeffa]

RBNZ- What Jeffa was looking for :

The Committee reiterated that there will be near-term spikes in headline CPI inflation in the June and September quarters. These reflect factors that are either one-off in nature, such as high oil prices, or expected to be temporary in duration, such as supply shortfalls and higher transport costs.

The Committee agreed that, in the absence of any further significant economic shocks, more persistent consumer price inflation pressure is expected to build over time due to rising domestic capacity pressures and growing labour shortages. HOWEVER the Committee noted that uncertainties remain as to the pace and magnitude of any pass-through of costs onto medium term inflation, especially given reported underutilisation of labour, modest wage growth, and well anchored inflation expectations.

The Committee noted that medium-term inflation and employment would likely remain below its Remit objectives in the absence of some ongoing monetary support. However, the Committee agreed that the level of monetary stimulus could now be reduced to minimise the risk of not meeting its mandate.