RBA

2022 - 5 - 3

Post cover — Image courtesy of "The Guardian"

Interest rate rise: who makes the high-stakes decision and how does ... (The Guardian)

The RBA is considering raising the official cash rate for the first time since 2010 and the outcome will have big ramifications for the federal election.

“There is still good reason for the RBA to wait to June and raise the cash rate by 0.4 percentage points in response to the sustained and broad-based increases in prices,” Sarah Hunter, a KPMG economist said. The currency has already dropped from the mid-70 US cent range to just above 70 US cents. Their view was “marginally in favour of cash rate rise” on Tuesday, although the verdict was only 53:47, Morley said. Why would the RBA hold back despite the CPI coming in at 5.1% for the March quarter? The RBA, though, would also be watching its overseas counterparts. Financial markets, though, have reduced their expectation of a rate rise, according to an ASX tracker. Scott Morrison has tried to blunt criticism that a Tuesday rate rise would be a poor reflection on his government’s economic management, blaming international factors for the high inflation. Staff, other board members and Lowe himself would often make presentations. Labor’s shadow treasurer, Jim Chalmers, meanwhile, says he’s “disappointed” that Frydenberg’s comments undermine the RBA’s independence. “A June increase would allow the RBA to act outside the election campaign, and with the benefit of seeing the wage price index release [on 18 May] before deciding on the size of the upward movement.” The central bank itself says only that “consistent with the Reserve Bank Act, the board makes decisions by a majority of the members present, with the chair having a casting vote”. The treasurer, Josh Frydenberg, also pointed to previous comments by Lowe – including in last month’s board meeting – that the RBA wanted to see inflation and wage data before lifting the rate from its now record low of 0.1%.

US stocks rally after wild night; RBA tipped for first interest rate rise ... (ABC News)

US stocks end higher after a volatile trading session, the Reserve Bank meets today to consider raising interest rates to curb surging inflation, ...

Westpac's Imre Speizer said in a research note that the bank predicted the RBA to raise interest rates today by 0.15 per cent to 0.25 per cent, which is also the market's forecast. Earlier in the session, Brent and West Texas Crude fell on the news that the European Commission may spare Hungary and Slovakia from a Russian oil embargo as it prepares to finalise its next round of sanctions on Russia. "The AGL Energy demerger is on track to be completed by the end of next month," the spokesperson said. The Australian dollar fell 0.2 per cent to 70.49 US cents, with the greenback approaching a 20-year high against a basket of currencies before the expected rate increase this week by the Fed. Official rates were slashed to a record low of 0.1 per cent in 2020 as an emergency response to the coronavirus pandemic. Yesterday, the ASX 200 index fell 1.2 per cent to 7,347. The Reserve Bank is tipped to raise interest rates later today for the first time in 11 years to curb surging inflation, which is running at an annual rate of 5.1 per cent. The Fed meets this week and is expected to raise interest rates by 50 basis points, to 0.75 per cent to 1 per cent, to tackle the strongest price rises in 40 years. The central bank last raised the official cash rate by 0.25 basis points (0.25 per cent) in November 2010, which took the OCR to 4.75 per cent. By the close, the Dow Jones Industrial Average rose 0.3 per cent to 33,062, the S&P 500 gained nearly 0.6 per cent to 4,155, and the Nasdaq increased 1.6 per cent to 12,536. The benchmark S&P 500 rebounded after dropping to the lowest since May 2021, and the Nasdaq fell to the lowest since November 2020 during the session. - The Dow Jones index rose 0.3pc to 33,062, the S&P 500 rose nearly 0.6pc to 4,155, and the Nasdaq rose 1.6pc to 12,536

All eyes on the RBA: First rate rise in over a decade expected (2GB)

An interest rate rise is anticipated today as the Reserve Bank of Australia prepares to meet. Economists are predicting the RBA will lift interest rates by ...

“The interest rate rise we have to have is going to be a killer.” It will be the first interest rate rise since November 2010 and since almost 1.2 million first homeowners entered the market. An interest rate rise is anticipated today as the Reserve Bank of Australia prepares to meet.

The case for an interest rate hike is clear. The RBA must act today (The Sydney Morning Herald)

With unemployment at 4 per cent and inflation over 5 per cent having official interest rates near zero is no longer justified.

But debt as a share of household income has risen sharply since the last phase of interest rate increases, which began in 2009, and that has made borrowers much more sensitive to rate hikes. The RBA strongly asserted that independence in November 2007 when its board opted to lift rates during a federal election campaign. It is more than 11 years since the last official interest rate increase in Australia; many with a mortgage have never had to confront the prospect of higher borrowing costs. This unfortunate contradiction between fiscal policy and monetary policy is now playing out in the middle of an election campaign. Given the strong arguments supporting a lift in interest rates, and the persistent debate about household cost of living pressures, the public anticipates action. A gradual return to more normal interest rate settings is in Australia’s interests.

How the RBA rate rise will impact Aussie property prices (9Homes)

Australians will end up paying more on their mortgage each month with the Reserve Bank of Australia's antic...

It is likely to mean their interest rate will increase, meaning the cost of your loan will go up," she said. The information has been prepared without taking into account your personal objectives, financial situation or needs. The information provided on this website is general in nature only and does not constitute personal financial advice.

RBA Chief's History of Caution Threatens Rates Traders' Wagers (Bloomberg)

Australian money markets reckon the Reserve Bank will respond to surging inflation with the most aggressive round of policy tightening since the 1990s, ...