Inflation - RBA response?

I think future lockdowns are a certainty based on the situation in the UK and other countries that are ahead of us in the Covid cycle.

 

Putin just put russia in a spin. Great for gas prices. I mean NATGAS is only up 500% YoY right?

So much liquidity in the system at this point if evergrande doesn't collapse- house prices could triple in 2022.

 

ANZ Bank economists have revised their forecasts and are now picking six rapid-fire 25 basis point rises (a quarter of a percentage point) at each of the monetary reviews to next August, taking the cash rate to 2 per cent, where it was in mid-2016.

Well, isn't this interesting.

Lockdown*

 

The same bank that was predicting 30% drop in property prices. I take it all with a grain of salt. It’ll be a big backpedal to raise rates before 2024.
Interested to know other’s thoughts.

 

How can the rba in good faith make promises 3 years into the future? This had created enormous moral hazard that has added a lot more huff to house prices.

 

Lowe is a god. He keeps repeatdly saying that the interest rate won't go up until 2024. Uncertainty is always certain in the financial market but BOSS of RBA knows the future. Lots of gullible people bought properties knowing that the rate won't go up until 2024 and cash future indicating increase as early as Sept 2022.

 

Even with rate rises coming in much earlier than expected, those who bought in early 2021 will likely be streets ahead from those who didn't unfortunately given the pace of growth this year.

If rates are going to rise in September 2022, housing will continue to post strong growth rates for the next couple quarters.

Knowing the environment, even being right about it, doesn't necessarily stop the growth. We will need borrower rates to actually increase, materially.

 

Follow the smart money - which you aren't doing.
Their mandate is job creation and inflation 2-3% actual.
Not forecast inflation of 2-3% which was always their case for the last decade.
Now they are waiting and need to record actual inflation before acting.

Let's think about it - over the last decade, they have missed about on average 0.5% off their target.
If you really want to bring it to break even. Does that mean it needs to do a catch up of 5% inflation and then some?

 

Perhaps someone can provide come clarity… with RBA’s continued purchase of government securities ($4 billion a week until at least mid February 2022), will this not mean interest rates will also remain subdued?

 

Lowe is far from a god. As is Jerome Powell. Made 1m+ stock sales at the 'peak' of the market last year ~ only to miss out on some serious gains.

The US banks are buying corporate chinese debt. The bubble has now popped. Time to brace for impact.

 

They can raise rates and still do QE. Its suicidal but yeh, it can be done.

The next fed meeting is coming up in a couple of weeks. They will be removing MBS first. That will wipe 80~b a month in mortgage demand.

 

Housing affordability collapses despite record low interest rates

excerpt:
"The biggest threat, however, could come from a lift in official interest rates. While the Reserve Bank has signalled it will not lift rates until 2024, financial markets are pricing in two rate increases by the end of next year. An inflation report from the bureau of statistics on Wednesday will give some guidance to the nation’s price pressures

So large are current new mortgages, Moody’s estimates a quarter percentage point increase in interest rates would translate into a 0.7 percentage point increase in the share of an average household’s income needed to service their loans."

the CPI print wed is merely a back mirror. its the front view that matters, USA FOMC also pricing about 2 hikes by end of 2022.

i am cashing up to prepare when donkeys in syd get into mortgage stress, i can show cash bid at 15pct below market... remember just like how fast price gone up, in downmarket there are simply no bids to hit

 

In the event of high inflation, the interest rate would obviously go up, but so does labour, material and land. Investors who have the means to hold on during the period of high inflation would be doing quite well after all is settled and stablised. Some of the highest price growth happened in the 80s where inflation was at double digit, those who was able to hold on see their investment tripled in price.

 

Watch Syd and Melb, high risk imo
Gravy train coming to an end

Wages are stagnant….. affordability is now the issue???

 

That is their stated mandate, but it is a ruse.

The real mandate of any central bank is:

1) to maintain liquidity to the banking sector, and ensure their solvency (not yours); and
2) to monetise government debt and ensure permanent funding of government deficits.

If inflation or price stability was their actual mandate they would be considered a failure. Inflation is a permanent feature and is grossly understated. But we are supposed not to notice.

Once you understand the sleight of hand that is central banking, it makes investing a lot easier. And it clarifies the incessant noise from people who think that the [insert asset class] is expensive and can't go higher.

 

Australian 2 year bond yields doubled today from 25bps to 50bps - the biggest single day rise since the collapse of Lehman Bros.

RBA decided not to purchase April 2024 bonds.

Australian shares fall, bond yield soars on rate hike fears

 

Top comment!

 

More rises today:

 

Macro shows talking about 8 rate hikes through 2023. 1 Each quarter. I can't help but laugh.

 

I agree that rates are probably going to rise before 2024. So what generally happens in that case with investments? Does the housing market come off the boil? does the share market go higher? Gold prices drop? I'd assume wages would start to grow pretty well, I'm a government worker so will probably feel a pinch here (I got lucky during the pandemic though).

How are people planning on making money, without resorting to niche or speculation investments?