Rate cut next month?

Discussion in 'Property Market Economics' started by jazzsidana, 21st Jun, 2019.

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  1. marmot

    marmot Well-Known Member

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    Just really shows the poor shape that many households are in with high debt levels.
    Once spending really slows down it eventually flows into the jobs market.
     
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  2. Mr Burns

    Mr Burns Well-Known Member

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    I think rates will drop further. We are lagging behind the rest of the developed world with negative rates. Funny how there was a lot of talk last year about rates going back to normal and 7 months later its "how low will they go?"

    It doesn't matter if there's a cut next month or next year. They will keep dropping until we hit a floor then the RBA will start printing and buying up bank debt to keep rates low.
     
  3. Tofubiscuit

    Tofubiscuit Well-Known Member

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    I'm calling 0% official cash rate within 24 months
     
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  4. Lacrim

    Lacrim Well-Known Member

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    A low cash rate will help mortgage holders deleverage (presuming new lending continues to be reined in somewhat), thus de-risking consumers. As long as unemployment doesn't go through the roof, people will start spending again. It's an extremely delicate balance.
     
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  5. Herbert

    Herbert Well-Known Member

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  6. Tofubiscuit

    Tofubiscuit Well-Known Member

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    My thinking comes from a different angle to the article.

    Yes agreed that cash rate is the blunt instrument that government and central bank looks to as the first tool to alleviate financial pressures on a nation's population (as a result of a poor economy).

    However, instead of focusing on the economic numbers, we could see it in relation to the current global geo-political and economic transition. Central banks has / or will become weaponised and is staring at a currency war as each nation look out for their own economic well being.

    Our recent rate cuts has done nothing to lower the $AUD, mainly due to the fact US Fed is going dovish again as they are engaging in an economic war. So for an export led economy like Australia, our first go to weapon is to lower $AUD further by cutting rates. It will have to be 0% to be effective.

    Now, if everyone in the world quickly learn to work together again and sing kum ba yah then this may not eventuate. The probably of this happening is pretty low in my opinion!
     
  7. Miss Monopoly

    Miss Monopoly Well-Known Member

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    Read it.......what did I miss?
     
  8. Waterboy

    Waterboy Well-Known Member

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    Denial is Not a River in Egypt
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  9. dragon

    dragon Well-Known Member

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    Ok @Waterboy .. lets hope to have another cut next week..
     
  10. Lacrim

    Lacrim Well-Known Member

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    Would love the AUD to appreciate as I'm going to the US next year for an exy holiday.
     
  11. Dean Collins

    Dean Collins Well-Known Member

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  12. Speede

    Speede Well-Known Member

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  13. Barny

    Barny Well-Known Member

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  14. Dean Collins

    Dean Collins Well-Known Member

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  15. Waterboy

    Waterboy Well-Known Member

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    Again, courtesy of Westpac's Rate Whisperer Bill Evans:
    Read More: https://westpaciq.westpac.com.au/wi.../September/er20190923BullForecastCashRate.pdf
     
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  16. C-mac

    C-mac Well-Known Member

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    Wow a cut next week is looking more likely. Just how much the retail banks will pass on, is anyone's guess.

    We must surely be into a critical 'eat into their profit margins' point by now, so I wouldn't expect more than 0.10 - 0.15 of the 0.25 cut, to be passed on.
     
  17. Speede

    Speede Well-Known Member

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    Not really.

    They still have credit cards at 15%+, personal loans,equip finance,business finance...still making a motza on those products.
     
  18. Waterboy

    Waterboy Well-Known Member

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    Their profit margins are also determined by their cost of funds (COF). The COF does not necessarily go down by 0.25% as the cash rate cut.
     
    Last edited: 27th Sep, 2019
  19. C-mac

    C-mac Well-Known Member

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    Good points. Let's see how greedy they are feeling and how much gets passed on.
     
  20. DrunkSailor

    DrunkSailor Well-Known Member

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    As I said to my friend the other day it’s going to be cheaper to buy an apartment than rent it. If your repayments are below 3% you’d save $100 a week just buying a two bedroom unit in Melbourne than renting it.