The US is almost certain to cut interest rates next month. Will the RBA follow suit in its September meeting?
To Cut or to Hold, What Will Be The Interest Rates Decision?
Comments
agree, they failed to raise high enough when it was needed even more than now
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The RBA has made the answer to this perfectly clear
This discussion is hence POINTLESS
doesn't matter, prices will go up regardless.
If interest rates go down, peoples borrowing power goes up, so prices go up
If interest rates go up, people get FOMO that interest rates will go up even more, so prices go up
Not true. When interest rates go up this reduces borrowing power of consumers without a mortgage. Further, consumers with an existing mortgage have less disposable income due to more of it being taken by interest repayments so therefore they buy less and in turn aggregate demand falls thus reducing inflationary pressures.
Not true. When interest rates go up
Have you seen the property market recently?
You’re claiming that when interest rates go up, prices go up. That’s not possible according to the law of supply and demand and the effects of reduced disposable income.
@WoodYouLikeSomeCash: But only 37% of people have a mortgage, those of us who don’t aren’t really subject to this tightening of supply and continue to spend with gay abandon. Personally I try and do my bit by spending on overseas travel so as not to contribute to domestic demand
High interest rates tend to have a negative impact on spending. There is more incentive to save and less incentive to take out a loan for, say, a car. This reduces demand and price in theory. Increased interest rates do tend to attract more foreign investment thus making the dollar more valuable. This can increase purchasing power. Say, prices of phones (imported goods) decreasing due to higher dollar value.
There are many reasons why the property market is hot right now, e.g., increased population, lack of supply, incentives to invest in property, etc. FOMO is only one of the factors. FOMO will always be present in the housing market because it's such a necessity and of its upward trend; but I don't think people are taking out more loans in general because they anticipate an even sharper increase in interest rates. Also, customers are probably not stockpiling goods across the board just because they anticipate the price to be higher in the future.
Anecdotal but with high prices and interest rates, I am currently budgeting more and spending less on groceries. I also enjoy the extra interest I get from my long term savings account. This is probably the case of many.
They'll hold or hike….. Inflation is still hotter than claimed.
Either Hike or Hold
HODL
I asked my quant guy..he said outlook unsure.
Inflation is still way over the target range and our interest rate is already behind the US. There'll be no cuts. If anything they should be hiking it.
Bahah America actually went harder for longer and got it under control.
Our RBA left it too long and didn't go hard enough, bunch of useless businesspeople. Inflation still isn't within the target band, in fact it went up last quarter.
Australia obsessed with not creating 'losers' (i.e. making jobs go, etc etc) but in the process all we do is create invisible damage to all of society via rampant inflation.
Same as with covid - for the sake of saving a few thousand 85-year-old lives we locked down the whole nation for 1.5 years and threw millions of children's education out the window by forcing them into remote learning. But hey, we did well with the headline statistic and that's all that matters.
NGL, kinda agree with you there.
Yeah it's weirdly political. It should just be a purely by the numbers type calculation, but it seems like it's more "What will the public think???"
Not sure how accurate that is and how apolitical the group is, but it definitely seems that way.
So you're suggesting that all the interest rate increases were done for political gain?
I'm hoping for a cut, but realistically it'll be a hold.
US set to cut their rates; which should give a bump to the AUD if we hold; so that's good for those with overseas trips planned during christmas I guess.
"I'm hoping for a cut"
why? serious question
.Agree. (profanity) knows why anyone would want a cut in interest rates as it means 1) higher house prices and 2) higher inflation. Whereas nice high interest rates means 1) savers and prudent borrowers benefit 2) lower inflation 3) more bargains on the share market and housing market due to lower asset prices.
Really?? Obvious possible reason, current interest rates are a significant burden on many highly leveraged households.
Not commenting on jlien's personal circumstances which I know nothing about, but for households struggling to make ends meet the things you have listed are completely irrelevant.
@larndis: Bad luck for those households. Maybe they should have taken advantage of the recent low interest rate period to de-leverage.
@larndis: Yeah, those fools who have leveraged themselves thought interest rates would stay at 01.% for the next 10 years.
@larndis: @JIMB0 @TilacVIP
OK, but how is that relevant to the question of why any individual would be hoping for a cut? Surely Nugs and justworld are taking the piss
@larndis: absolutely not taking the piss.
low rates means higher demand across the board leading to higher prices on everything.
higher interest rates leads to higher mortgages/loans (not sure what else would be affected)
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Ww3 pending, thus hold
Hodl
Why worry about things outside of your control.
The RBA will definately hold until a recession, and then urgently slash.
Cut. Construction is in shambles. Lots of companies are going broke or on the verge.
Not in my suburb and nearby ones. Plenty of new houses being built.
Doubt they’ll lower, hold I think