Even the PM admits RATES WILL RISE

After we have established the banks are very happy to raise rates independently of RBA, and have done.

The markets via rise in AUD are clearly expecting a rate rise.

Now Malcolm is setting every one's expectations for an RBA rate rise . . . and continues to bash indebted investors subtly.

Rates will climb and borrowers should prepare, says Malcolm Turnbull

 

Who is this guy anyway. Can't imagine he has any real influence.

 

AUD rise is because USD weakening, not because interest rates may rise here anytime soon.
AU rate is still way higher than US so the dough comes back to invest.

Malcome Turnbull is disappointing to say the least.
I now take anything he says as being not serious at all.

 

No he is just SETTING EXPECTATIONS.

This rise is all about Aussie dollar actually.

AUD jumped following RBA minutes which Turnbull referred to directly, AUD also jumped following strong jobs report today which will give RBA another excuse to raise sooner rather than later. Nearly 80 cents now.

Again, while it remains POPULAR for politicians to target property investors in debt, and PROFITABLE for banks to raise rates - why wouldn't we see politicians cheering it on?

 

Yes the next interest rate move will be up and let's hope this spurs the AUD higher to 90c +

 

So rates rise eventually. Old news?

 

Funny man this malcolm.

 

PM is also a financial analyst, planner and mortgage broker. He's doing morrisons job.

 

I think the term is "jaw-boning the market". Usually the job of the RBA governor (who I also ignored over the years and became wealthier because of not listening to such 'advice').

 

Why would the PM be jawboning though? For what purpose? Just to help the RBA out, sounded like he was calling as he sees it . . .

 

Political reasons - so he can say 'I told you so' - to get PIs to continue to vote for him next election. Maybe I'm too cynical?

 

He's saying this in response to the RBA's minutes in which they strongly and unexpectedly signalled a rise to 3.5%. When is up for debate, but it was certainly interesting timing, especially right after the Bank of Canada upped rates just the other day (bubble be damned). Prices there are down a lot since April, about 10% Canada wide, and even that didn't stop their rate hike.

Most of the central banks have turned pretty hawkish of late, and the RBA probably can't fight the tide forever. I agree it's a bit of jaw-boning at this point but it's probably directed at homeowners to manage some expectations. If you say you're going to hike rates eight times and then do it once or twice, or you do it very slowly, it's going to be less of a shock than if you just hike out of the blue.

 

I thought he might be trying to assuage some of the panic. Economists have gone from pricing in maybe a 50% chance of a rate hike by next year to having it be a near certainty. I've seen some pretty hysterical discussions around it. People reading 3.5% might also freak out, so I think Turnbull's trying to assure people it's not going to happen overnight, while still pointing out rates are probably done falling. It probably also helps him to set the RBA up as a bit of a scapegoat. He can say look, they hiked too fast, if the market corrects.

 

With the rate USA's going, I won't be surprised.

 

there is a theory that the next move by the rba will actually be a 0.25% drop to mange the $A and keep exports competitive......

 

With the housing market the way it is, and with Lowe at the head, I don't see that as being likely but it's possible. I don't think we'll see a rate cut unless and until the economy tanks.

 

Unfortunately RBA has a blunt instrument with which to manage a complex system. Banks are being hit by APRA on mortgage book composition and CET1 capital requirements and Govt on taxation so will raise rates thereby moderating house prices which may give RBA wiggle room on rates to manage the AUD.

 

The crap part is even though the RBA rate is low, the bank rates aren't that low. I wonder if anyone has a graph showing the discrepancy between the two?

 

Absolutely, check out below graph . . I think when the **** hits the fan in Sydney, this will get more focus, the fact the banks decided to decouple from official rates a couple of years ago. In good times, who cares right?

 

It's curious too that policy (and a perfect storm of other factors e.g. the small bank downgrades) seems to be pushing them in that direction. The bank levy, APRA's 30% cap in IOs, APRA's capital rules (those these have been pushed back slightly, quite possibly because the banks have been so responsive in upping rates on their own). I won't be surprised if we see the gap continue to widen.