Another interest rate cut?

What if we get another IR cut Sept/Oct, how will this impact on property market? Will it continue to rise in Syd, Melb and will Bris finally take off?

Thoughts..?

MTR

 

I think it will cause the 'top' for sydney to be further away then some think and will keep brisbane bubbling along, but nothing crazy

 

It won't make any difference. With what's happening in Europe, the cost of funding is increasing. Any interest rate decrease by rba won't be passed on by the banks.

 

Yeah..most or all won't be passed on...
It will still appease the rba- not passing on in full limits further runaway growth in syd and Mel, whilst reducing the dollar...rba wins on both counts.

 

I think this is possible

 

RBA cash rate 1.5% by Jan 2016

 

This is a catch 22, a lot of my clients are asking me what will happen with the rates. It is a question of confidence and what the RBA is required to do/forced to do. The RBA is trying to spur the economy with lower rates the fundamental problem is people have large mortgages and they want to continue paying those down before rates climb back up.

Personally I think the rates will fail short term dependent on what happens with China. The exchange rate has dropped a bit which is good for exporters but also makes Australian assets cheaper for foreign take overs.

 

The ASX 30 day graph has taken a real dip in recent days on the back of the Greek debt uncertainty.

But I still don't see the RBA cutting.

Whatever concerns they might have over Greece (an economy on the other side of the world with a GDP only 60% that of NSW), these are more than outweighed by the problems in their own backyard - namely what they see as bubble-like behavior in Sydney and Melbourne RE.

They also have said they consider that a 2% cash rate is accomodative (hard to think it isn't really).

So what benefit cutting it even further?

Both in terms of stimulating the economy and also with regards putting a lid on the boiling pot that is the property market.

I don't think they're in a rush to raise rates.... but I think that (on balance) a raising bias still exists (despite the spooked markets).

 

when it comes to cash rate I will focus on the US, China and Australia inflation rate, at the moment these three countries are all well under the healthy inflation rate that supposed to be, it will be insane if the RBA increase it's interest rate.

My take is before we see 2.7% inflation rate happen in Australia, there is almost impossible for the RBA to raise the interest rate.

 

This morning the media stating interest rates will remain on hold, with Au$ down I think close to 74, perhaps pressure is off??

MTR

 

Inflation is low so there is no reason to raise interest rates. However, the Australian dollar is down to its lowest levels since 2009. The RBA has already expressed concern over house prices in Sydney and has urged for the Federal Government to fiscally stimulate the economy. The RBA has realised that monetary policy hasn’t had the desired effect so I don’t see them being in any rush to lower interest rates again. The only reason they were lowering interest rates (apart from trying to stimulate the economy) was to lower Australia’s currency. Most economists predict that Australia’s currency will remain steady if not fall further so there is really no need for the RBA to drop interest rates again. My prediction is that rates will stay on hold for the foreseeable future.

 

Michael Matusik (not an economist but some might say that is a good thing) has tweeted this afternoon -

"the RBA will not cut today but it will soon - the R word is marching on Australia & it will have no choice - 0.5% down in Nov for mine"

I don't agree with him, but that's economics and we're all entitled to our opinions.

 

How dare you, dont you mean buy up more property ?

 

http://www.rba.gov.au/media-releases/2015/mr-15-11.html

Quote..
The Australian dollar has declined noticeably against a rising US dollar over the past year, though less so against a basket of currencies. Further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices.

 

Without major shifts in both the global and national economies, I think another 25BP cut is all but inevitable.

I don't think it will have much impact on the markets, just allow them to keep following their trajectories a bit longer than if no cut were to occur.

 

I'm not quite looking forward to our family holiday in the US this summer...

 

Australians should think themselves lucky being so far from Europe and it's problems,but the US money market bond markets are starting to turn in the upwards trends,and with the appearance of inconsistency what's happening in the euro zone may well make the US dollar more powerfull again..imho..

 

US Housing market is well and truly moving North, and UsS homebuyers back in the market

MTR

 

First time seeing the bar drop below at 1.75 mark. It's coming

http://www.asx.com.au/data/trt/ib_expectation_curve_graph.pdf