What is everyone’s predictions for the RBA?
Punxatawny Phil will just go another 0.5% and meet expectations?
Peachy has been very quite the last few days – probably busy at her job at Coolabah capital
I note the AUD is up this morning so maybe the market expects a 0.75% surprise
what’s interesting for me is that the RBA still hasn’t reversed its QE, so there are excess reserves in the system which would normally force the overnight rate to 0
Instead of using repo and reverse repo, it now has to manipulate the overnight rate by paying interest on excess reserves – how long can this go on for? Are they going to be paying 3 or 4% on excess reserves?
And is that inflationary?
i’m with MB on this one raising interest rates isn’t doing shit about inflation, and probably wont matter for houses that much either so there’s no saving grace
Even more than being not anti-inflationary, there is a heterodox school of thought, that I have mentioned here before, that even in normal times higher interest rates are INFLATIONARY
That is before you consider the fact that central banks are no longer manipulating the overnight rate via conventional repo/reverse repo arrangements – because that is impossible due to the amount of reserves created by QE
Now, they are instead doing it via IOER – that is they are literally printing reserves every day and giving it to the banks for free
Banks can use these reserves to purchase financial assets
Once upon a time, people thought excess reserves would be INFLATIONARY due to multiplier effects
Now we are literally INCREASING reserves in an attempt to INCREASE rates in an attempt to DECREASE inflation
I think that central bankers and economists in general have no idea what is going on
they dont
lowe is seriously the dumbest cunt you ever did see, hes got everyone fooled into thinking he’s this genius playing 5D chess because nobody who would become the chair of the reserve bank could possibly be a dumb cunt
but nope he is seriously just a dumb cunt
Of course it’s not doing anything the real rate must be -10%
Stagmal, I disagree. While higher interest rates definitely won’t reduce the price of steaks and fuel and stuff, they will strangle wage growth/employment.
in the RBA’s mind, that will be “mission accomplished” as -they will figure- their intervention will have prevented a wages-prices-wages-prices positive feedback loop.
as to houses – interest rate rises will exert ENORMOUS pressure for transaction prices to fall. It’s how interest rates work in relation to asset prices.
This is why I always laughed at the “pushing on a string” theorists who figured that prices won’t rise even if interest rates fall because “nobody wants more debt”. lol
ya idfk anything about it peachy
and what will the extra 0.5% on IOER do peachy?
After QE created trillions of reserves/ES balances worldwide?
either QE is inflationary or it isnt – I don’thave a firm view one way or the other but you have to be consistent
Total QE in australia was 300bn
Total reserves in the australian banking system is ~500bn
1.25% IOER means an extra 7.5bn of reserves EVERY year
if we get to 3.75% it means an extra 22bn of reserves EVERY year
Is this inflationary?
If not, then why were we doing QE?
If it is, then why has the RBA not done QT rather than increased IOER?
Why are the banks being given free “money” which they can be used to buy financial assets (its not even an asset swap like QE was)
You should have borrowed less champ
..
my DTI is about 1.2x
debt is fixed at 2.09% for 3 years (2.5years left), and I could pay it off before then if I wanted
I’ll be right thanks
what you might want to consider is that increasing IOER might further inflate asset prices, not reduce them
Fair enough. Do you just feel silly buying at the peak then?
I didn’t buy at the peak , I just fixed my mortgage at the trough
this particular house was purchased 2015
has more than doubled since then
thanks for your concern
Enjoy the show then
EmBee narrative is that rates can’t go up, but they have funds to sell. So, I don’t trust their narrative.
Raising rates will slay inflation, but it will come at a great cost. If the CPI is made up of goods that are essential and discretionary, then discretionary will have to deflate in order for inflation to be brought under control.
Once again another poor prediction by EmBee.
65bps for a nice even 1.5%. If they do a token 50bps then the RBA is going to be boned. Given the metrics they are using has a ?3 month lag they are chasing their tail and won’t get inflation under control. Fuel excise getting cut in Sept will really have people howling. It’s a good time to be debt free. Cant say I feel bad for those that are leveraged to the eyeballs. You see them in their 80k cars going to the food bank drive thru… and the pain hasn’t even really started yet…
Yeah i reckon they would want aussie to be above .70 so probably surprise on the upside.
I hope for the same
how much do these interest rate raises actually feed into term deposits?
Term deposit rates doing weird things. Last week judobank had one year paid monthly at 3.05%. This week its down to 2.85%, same conditions. So i have no idea whats happening.
Soo, my prediction is rate CUT or leave as is.
heil hitler
Call me Garry. People give me crap about my last name all the time.
lol r u FR is that really your last name
Heil Garry!
That’s not funny. My father died in a German concentration camp.
He fell out of his guard tower.
You are just being unpleasant, I think.
Oh, I’m sorry, that was very insensitive of me. The dude that I heard of with a similar name fell on his bunker floor.
probably because the Aus govt bond yield went from 3.5% to 2.5% in the space of the last week or two
Ta thanks. That may help me work out when to lock in this lump sum I’ve got.
Ok, now Macbank Term Dep has gone from 2.75% year/paid monthly last week, to 3.20% today.
Is this a funding or aus govt bond issue do you think?
They probably needed some one year funding and did it by term deposits. You can sometimes see some odd term deposit rates that may not make sense, so you will know that they need some additional funding for a certain duration.
I don’t have a strong view for this month, I’m afraid.
just to have a prediction out there, though, I’d say 0.5. that can be spun as acting decisively…but also in a measured way, not foolhardy.
Peachy is definitely on the RBA board.
life’s a peach when you can make predictions this good
4 minutes
ARE YOU ALL
PUMPED
The fact it’s being televised on a couple of channels live makes me think they are going to surprise people
50bps. Boooooo
the peach got it again
That’s because she has insider knowledge.
peachy can i have investment tips pls
While everyone is distracted by the RBA Brad Hazzard has come out and recommened a 4th dose of the jab for under 65s. I guess contracts have been signed and the plebs have to line up for their own good.
Fuckenell…. I don’t think that even the 65+ folks want this shit anymore.
seem to recall they were pretty horny for dose 1 and 2, but that has faded. By my barometer, anyway.
Meh. I saw a poll today on the age or somewhere. Asking if people would get 4th booster. It was overwhelmingly yes and surprised me. Probably 80% had voted yes.
I saw that poll too.
there’s a funny ring to 80% metric, it tends to be the most believed fake. Actually 82% is the most gullible fake number.
80% is bullshit.
with the 3rd dose, only 60+ cohort got to over 80%. Victoria does nice graphs for this.
4th dose will be lower
The poll was if the punters would punt their long term health to make HapHazzard Brad have a wet dream (i.e. punters to get the next -4th- round of jabbadabba) and the poll was at 80% to have said yes.
It was on either FakeNews.dot.dot or Sydney Morning ‘Heap’
If the poll was in the SMH which has an average readership age of around 70-80 then the results could just be reflecting that.
I don’t agree with it but if you talk to the average punter who isn’t a tradie then they are happy to roll up their sleeve and get as many jabs as theyre told.
undoubtedly, the complacency down under is probably second to Danes and/or Swedes.
I was pointing towards the poll being fake, serving only to peddle the chosen narrative. 80-84% is subconsciously the most believable fake % number.
No, 80% of their readership voted yes. Given about 65% of over 16s had a booster, it is more of a reflection of their readership than on general society.
Yeah I know. Figured that was implied and didn’t need to be spelt out for folks around here.
It makes no sense. So the unjabbed can come visit now but the locals need 4 doses?
I still think a lot of people will line up even though they’ve had the ‘Rona and have better protection than a jab would offer.
Yep, all my mudblood acquaintances said nah after clot-shot 2
This bloke has tapped out due to “suddenly”.
he was the chairman of some healthcare company, so presumably 3x shots into the regimen.
64 is the new 84.
Or even 54, according to all the recently dead people I used to know.
the same mob likely sad no to jabbadabba last year until it became compulsory prescription and then a resunding NO became “it’s the right thing to do, MOIT”
so not underestimate the power of the complacency.
AUD fell instantly 68.9 to 68.1 , so the market was maybe expecting more
will be interesting what happens to the Aussie dollar if Powell surprises with a big rise next fed decision
Won’t somebody please think about the savvy property investors:
https://www.news.com.au/finance/economy/interest-rates/22yo-property-investor-impacted-by-rba-rate-hike/news-story/ab8e925753594c8aa7ca6c3598774ad0
That was an unintentionally heart warming article. I particularly liked the bit where the property parasite claimed he might have to put the rent up as rates were rising, good luck with that.
Let’s take a moment to remember macrobusiness’ favourite punching bag, Nathan “IQ” Birch. The amount of shit that they hung on him and yet if we compared his gains to DLS et al over the last ~7 years he’s come out with the last laugh one would think.
Smart people make money on a specific ‘up’ event. Very smart people make money on many shifting event be it up or down.
Nathan made money on property rise, he is likely to make money on property downturn (now that apparently he pulled out of overleveraging and owns only what rent income can pay).
Imagine the purchasing power of those that have several self-sustaining properties during a severe downturn (nice D2L ratio)…
Nathan’s been fairly quiet on social media – his last video in March about buying Gold…
Probably was long crypto ….
Would be funny if a large cohort of “leverage the equity in housing” bros were brought undone by large crypto bets 😜
I will get the popcorn … 🙂
They really couldn’t find anyone better? Most people would have a PPOR worth more than this guy’s total investments…
https://www.abc.net.au/news/2022-07-06/interest-rates-are-rising-and-australians-are-hurting-is-the-rba/101209428
Another article featuring Sara Ibrahim the mega mortgage muppet.
Cry more.
And look at this mess.
Umm, APRA are supposed to guard against that outcome, but the RBA got on the phone and told them to back off the buffer.
If the coming RBA review doesn’t look into the way monetary policy has been used to target housing it will be a waste of time. I’m worried we’re going to end up with a woke board and that’s about it.
alright, I’m pencilling in a work board, then!
this should be good for MOAR easy credit. As each wokester representative will want to ensure that their particular constituency gets a goodly cut of easy money.
Woke board, you mean to get credit to diverse parts of the community. Hasn’t this been tried before in the US? What was the result again?
When did this happen?
It makes sense to back off a little as rates are rising. The mistake was made by APRA retaining the same buffer when rates were temporarily lowered to emergency levels.
It happened after the 10-15% housing correction caused by the royal commission fallout. Prudent lending is unEZFKA.
Even if the RBA kept rates at 0.1% until 2024, it would not help Sara anyway. If you only pay your minimum payments, it is unlikely that the total loan would reduce much in three years. Higher interest rates would affect her in two years instead of now.
Far easier to blame someone like the RBA or the bank for your failure to grasp basic finance and basic risk management concepts.
“Like thousands of others, Ms Ibrahim and her partner, who have two young kids and already were struggling with the cost of living“
So she goes out and borrows $1.5 million? Idiot.
I’m glad its them and not me.
At the risk of starting a shit fight….. You’d rather “invest” in bitcoin?
Oh for sure. Get with the times daddy-o – i got granite hands and I’m buying the dips. It’s going to the moon
I swear the schizophrenic psychosis of the posters here
one day it’s : oh noes, the rba is printing money . It’s going to be inflation
the next day : RIP everyone who has taken out debt at 2% – now interest rates are 2.5% house price crash incoming
it’s one or the other you stupid cunts
if we are running negative real interest rates , and you believe the cbs printed x trillion dollars then anyone who is in debt is making money every day doing nothing
you could have invested in houses, baked beans or magic internet money and you’d be ahead
if we are in deflation, then QE was never money printing
Coming… you’re fetishising the idea that QE isn’t money printing.
but this is neither here nor there. QE might or might not be money printing. It is not the be all and end all.
and in either state of the world housing might rise or fall with QE on or off. Because other things are at play too.
lol You spent the last 2 years calling it money printing
now it’s neither here nor there
Coming,
The original post re: schizophrenic psychosis deserves it’s own post, methinks. This way we can all come unglued and argue for the millionth time all things money, bitcoin, interest rates and other beliefs that ppl hold near and dear to their hearts, and will not, for the most part, change their mind on.
Peachy,
Do you think my weekend “Stories” post was worthwhile? I have enough to eek out another few weeks of stories….
if inflation is 8%+ and interest rates are 2% – are you not better off being in as much debt as possible?
if deflation has taken hold, then what the fuck are people doing investing in magic internet beans?
it isn’t possible to hold both positions at the same time
its the classic MB cognitive dissonance
Mr Mark, I do like reading stories, so would be fun if you posted more.
I generally don’t visit EZFKA much on weekends, on account of awesome social life and bountiful beauty sleep, but catch up on weekend happenings at a later date. Unfortunately that doesn’t really avail me of the opportunity to provide feedback to the generous posters 🙁
It is money printing. It is. But that – in itself – means basically nothing. What matters is how that QE money is deployed, and that is affected by other bits of the system.
to help you understand – just think of something that is definitely “money printing” – printing physical currency in the form of notes.
let’s say Lowe prints up $400b in nice new pineapples tomorrow. That is clearly money printing. But just because we have established that there has been money printed, we are not in a position to predict the effect on the economy.
what will really matter is what happens to the printed money.
Lowe?
Lowe can’t spend money on anything, beyond his $1million salary
All Lowe can do is buy bonds from banks, and give them reserves
which is what he has been doing
What have the banks been doing with the reserves?
Increasing IOER is giving them more and more reserves every day – what are they going to do with THOSE reserves?
Are THOSE inflationary?
The $300bn of reserves he already created – those are still around. And they are increasing at the rate of 1.25%/yr at the moment. Probably 1.75%/yr next month
Why did everyone suddenly switch their prognosis from inflation to deflation, if reserves are money?
dont get overexcited.
clearly pumping money into the banks (which is what rba has done) is inflationary at the margin, in particularly wrt those things that banks then point the money hose at (viz. housing).
that’s not hard to understand.
what seems to be harder for you to accept is the “at the margin” bit, above. that there are other things at play too.
so if banks are pumped full of cash while everything is humming, housing inflates.
but if they’re pumped full of cash whole salaries across the EZFKA are all halved (because magic), then housing deflates notwithstanding the banks being pumped.
but perhaps housing would deflate MORE if salaries halved AND banks weren’t pumped full of cash.
how are we going to get inflation if salaries are halved?
more MB-style disordered thinking
ah, you see – now you are asking more relevant questions. This is better than just focussing on whether interest on reserves is money printing or is not(and other similar matters), which you were overindexing on.
and we haven’t even gotten to the most basic question of “what is inflation?”
Once you start thinking about the right questions, you’ll see that there is no contradiction of the kind you originally suggested:
this is the kind of speak vaguely and handwave and ask rhetorical questions to make it seem like you know what you are talking about
Don’t be a dunce.
I’ve explained with very simple examples how the binary distinction of “money printing” vs “not money printing” is inadequate and insufficient to the task of predicting “inflation” or “not inflation”.
(putting aside even the question of what is inflation or what kind of inflation)
an even simpler example that even you will understand^: if Lowe prints a dozen pineapples and gives them to you personally – will this money printing cause inflation?
Haven’t you worked out yet that coming simply cant deal with any ideas more complex than a binary thing x causes inflation/deflation.
No, but I’m a bit slow :/
Hypothetically, if there is a period of, say, 5% asset deflation caused by tighter monetary policy following on from a period of 30% asset inflation fueled by QE, QE was never money printing? That 25% remaining is what?
Yes JCB – you are very correct to add the time dimension!
If QE was money printing, and we are now paying interest on the QE that was printed – that is still money printing
QE was never reversed. In fact, we are still rolling over bond purchases that come to maturity
AS WELL AS creating more reserves out of thin air through IOER
and i’m pretty confident that the retards that come to this place are expecting houses and other assets to crash by more than 5%
but at the same time expect their gold/magic beans to go through the roof
im pretty confident we’ll see houses more than 5% down. That’s how interest rates work.
Yes, QE is money printing. I don’t give a fuck if they physically print it or magic up some numbers to put into a banks account. And it’s the amount/liquidity that matters, probably rate of change too.
Yeah, but the “cheap” money has stopped flowing. The central banks could print up trillions a day and if it just sat on a balance sheet it wouldn’t do much.
Paying IOER is a few drips into the bathtub, and with inflation running at well over the cash rate, it’s even less of an issue.
Stocks have already and I’d be surprised if housing didn’t drop more than 5% in real terms.
I guess if inflation remains high enough and real interest rates are still negative, nominal prices could be sticky. But that would probably require some juicy wage growth.
Any way I’m off. Stop listening to Jeff Snider. He’s a spastic.
Can’t wait for Boomers to start talking about how bad they had it
Well, I’m stealing that least one.
LOL
the last part is a goody lol