RBA

2022 - 9 - 6

Post cover — Image courtesy of "ABC News"

CBA warns of mortgage lags as Reserve Bank set for another super ... (ABC News)

The Commonwealth Bank warns there is a "clear risk" that the RBA will lift interest rates too high, too fast because of the lags in how they are passed on ...

"This creates natural tightening even with the RBA on hold (note that the average loan rate for a borrower rolling off a fixed rate loan over the next eighteen months is around 2.25 per cent. "But that will occur in time as the rate hikes 'kick in'. "This interest is added to a borrower's outstanding debt. This rate is significantly lower than the standard variable rate, which is likely to rise to 4.5-5.0 per cent with a cash rate of 2.60 per cent)." "The rapid pace at which the RBA has tightened policy, overlaid with a full appreciation of the lags between rate hikes and the cash flow impact on a home borrower, means there's a degree to which the RBA board is flying blind," he said. "There is a large proportion of fixed rate home loans that will expire over the next 18 months," he said. At CBA, for example, by December the impact of already announced rate rises on monthly cash flow for mortgage holders will be a four-fold increase compared to July." "This means that the bulk of our borrowers have only felt the impact of one 25-basis-point hike on their cash flow (or potentially, as of this week, the cumulative impact of the May 25-basis-point rate hike and June 50-basis-point rate increase)." It is no surprise then that the full effect of the rate hikes the RBA has already delivered are not yet being felt at cash registers across the country. But from a cash flow perspective the impact is not felt for three months on average for a CBA customer. - The RBA is widely expected to raise the cash rate target by 0.5 of a percentage point in September - That means most variable mortgage customers have not yet felt the cash flow effects of at least the last percentage point of rate rises

It's time to give the RBA permission to be unpopular (The Sydney Morning Herald)

Taken from 63-year-old legislation, it states that the RBA has a duty to contribute to the stability of the currency, full employment and the economic ...

So let’s give it the room it needs to be unpopular when it needs to be. The RBA cannot be all things to all people. It also suggests the bank can be all things to all people. For those who communicate RBA actions to clients and the public, such as financial journalists and market and commercial economists such as me, in columns like this, there should be full transparency. Taken from 63-year-old legislation, it states that the RBA has a duty to contribute to the stability of the currency, full employment and the economic prosperity and welfare of the Australian people. It implies the RBA won’t do anything to make anyone worse off.

How to fend off the impact of RBA hikes (Australian Broker)

The Reserve Bank is expected to make another cash rate hike today – the fifth time the board has lifted rates since May – with a 0.5 percentage point ...

People on a variable rate might feel powerless right now, but that doesn’t have to be the case. “The average borrower could see their variable rate rise to over 6% in a matter of months unless they take action. Switching to the lowest variable rate might seem like hard work but it can translate into over $6,000 in savings in the first year alone, for someone with a $500,000 loan and 25 years remaining. Act now, because the sooner you refinance, the more money you’re likely to save.” Refinancing to a more competitive rate will help mitigate future RBA hikes. “While we’re likely to be well over the half-way mark, the

RBA Preview: Forecasts from seven major banks, 50 bps rate hike ... (FXStreet)

The Reserve Bank of Australia (RBA) will announce its next policy decision on Tuesday, September 6 at 04:30 and as we get closer to the release time,

The risk is for the RBA to hike again by 50 bps at the upcoming meeting given elevated inflation and inflation expectations.” From here on, we expect 25 bps hikes across October, November and December, for a year-end cash rate of 3.1% to approach the so-called “neutral” rate. “We expect the RBA to hike by another 50bps. The key question now is both when and at what level the policy rate hike will terminate. We anticipate that the cash rate will rise to 3.10% by year-end and then peak at 3.35% in February 2023 – with moves of 25 bps each meeting from October to February.” Of more interest is whether Governor Lowe mirrors an urgency to get on top of inflation like the Fed/BoC/RBNZ.” The RBA is set to hike the Official Cash Rate (OCR) by another 50 basis points (bps) to 2.25% in September vs. Thereafter, we expect the RBA to continue hiking policy It is in this environment that the RBA is removing ultra-easy monetary conditions and will shift to a contractionary stance. “We anticipate that the RBA will lift the cash rate by 50 bps. In Australia, headline inflation is expected to climb to over 7% by year-end, the labour market is the tightest in 50 years, and wages growth is accelerating, albeit from modest levels. But we are also alert to the possibility of a dovish shift via the reference to the normalisation of monetary policy being changed or dropped.

RBA expected to raise cash rate by 50 basis points in September ... (The Canberra Times)

Mortgage holders could face yet another increase to their loan repayments this month, if the Reserve Bank of Australia raises the cash rate as expected on ...

As the region's dedicated property journalist, Brittney covers everything from real estate trends and new developments through to the stories behind the record-breaking sales. Brittney Levinson joined The Canberra Times in 2021 as part of ACM's national property team. Our new comment platform requires only one log-in to access articles and to join the discussion on The Canberra Times website. [how to register](https://www.canberratimes.com.au/story/7739877/canberra-times-launches-new-commenting-platform/) so you can enjoy civil, friendly and engaging discussions. We've made it a whole lot easier for you to have your say. "The RBA will be conscious of the need for further increases in the cash rate to tame these pressures, and an increase of at least 25 [basis points] is a near-certainty; the board could choose to increase by 40 [basis points] (to return the cash rate to its pre-COVID increments), but a 50 [basis points] increase looks marginally more likely," she said.

The Match Out: ASX grinds higher in a quiet session, RBA to hike ... (Livewire Markets)

A positive start to the trading week with the ASX defying the negative lead from the US and weakness in Asia to push higher into the close – Energy the ...

- Regal Partners (ASX: RPL) Trading Halt was in the market raising $110m this morning at $2.60 to seed new funds. Follow my profile to be notified when the latest report is live. He is also Senior Portfolio Manager within Shaw and Partners heading up a team that manages... Goldman Sachs can see UK Inflation topping 22% if energy prices continue to rise, not surprisingly UK 2-year gilt yields have already hit a 14-year high. - Iron Ore was ~3% higher in Asia today supporting a bounce back in Rio Tinto (ASX: RIO) +1.75% & Fortescue (ASX: FMG) -4.59% (down 79c while they traded ex-divi for $1.21) - The US S&P500 is in the midst of a 25% correction from its January high and while the markets arguably become too pessimistic and oversold the trend clearly remains down. - Rising interest rates are a huge headwind for stocks specifically leading to a value contraction across the highly priced growth stocks / sectors, something we haven’t meaningfully experienced in over a decade. - Communications (-0.90%) and IT (-0.84%) the weakest links. - Shaw initiated on Premier Investments (ASX: PMV) +2.85% this morning with a Buy and $27.10 PT versus $21.27 close today. - Pilbara (ASX: PLS) +4.23% rallied on a broker upgrade while Lovisa (LOV) +3.99% hit new all-time highs today – two positions we hold in the Emerging Companies Portfolio. - The RBA is likely to raise rates tomorrow, the market now expecting 50bps taking the cash rate to 2.35%. - The Energy sector was best on ground (+3.97%) while Materials (+1.94%) were also strong.