US Fed Increases 0.25%...game changer?

Interesting...overnight the US Fed just raised rates....this reduces the chance of another IR rate drop in Australia as the dollar will drop and economy here will get better......

Interesting....will also be interesting for people who own properties in the US....

 

Well our dollar didn't drop. In fact, it went up during the announcement!

The rba will cut again next year. The budget is in a terrible position and we desperately need economic growth.

 

I think we've seen the end of easing cycle, absent of a significantly detrimental economic event. RBA has noted the diminishing returns from further cuts and market distortions that may arise.

Reason for the rise after the announcement is more to do with oil which bounced, and brought up commodity prices with it.

Budget is poor, but current debt levels nowhere near as other OECD countries.

 

If the economy gets better will that stop house prices dropping as much as people expected?

 

Maybe....but if the economy performs...rates could also go up quickly....I am already planning to fix some of my loans.....

 

About time they raised interest rates in the USA. They've been speculating about it for ages, but the positive employment numbers cemented it.

 

Its been 9 years, long time between drinks that is for sure

 

the dollar has bounced back, it hit I think 68-69, now 72.
Predictions are 65?? don't know anymore, was expecting this by now

 

Hi Sash

Interesting times.

Regardless USA property market (foreclosures) has recovered.

You can no longer source houses in Atlanta for $35K, you will be looking at around $130K. Friend just sourced finance on her properties and bank valuations were excellent, highest at I think $210K.

I am going to US next year as am seeing further opportunities.
Keep you posted.

MTR

 

there will be very limited interest rate increases in USA, It is election year and generally speaking it would be very damaging to the incumbents for interest rates to go up, so from .25 to say 1 percent is a big percentage increase. Very bad news for incumbents.

 

The increase in interest rates was overdue and well and truly expected, so currency impact was already largely priced in. If anything they were more conservative with their emphasis on a gradual tightening cycle than people may have expected.

I just look forward to a return to a world where good news results in good market reactions and bad news results in bad market reactions. The effect QE had was the opposite - celebration of bad news as it would result in more fake money being pumped into markets, and punishing markets for good news as it meant the magic money tap would get turned down.

 

And that is the issue...people have got so used to low rates and easy money...if this changes....the shock waves will be felt.

 

Sure would be nice to be able to put money in the bank and actually get something back for the first time since my Dollarmites account...

 

but many have bad credit due to crash/foreclosures

Times are changing, US banks are now lending to home owners, let's see what happens, me thinks one step forward two steps backwards

 

Think this has been talked about so much that it was already done, our minerals will do more than the US change, but was thinking about money costs and further tightening.

Frankly, I cannot see how the economy is doing better, are they lowering the deficit ?

 

Australia's in a highly risky position now, especially on an inflation and interest rate outlook. I'd be hesitant about going too hard too fast from this point.

 

I think this is what I have been saying

 

Interest rates, yes, maybe due to costs and less money and regulation, inflation ? of what, besides housing ?