When will the next rate cut(s) occur?

It seems inevitable that rates are headed south another 25-50BP.

The question is, when and by how much?

Or do you believe the next move is up?

You can pick TWO choices if you believe more than one cut is on the cards.

 

I think the more interesting question would be, if they do get cut what % will get passed onto residential investors?

 

Have a read of this to get a perspective on how it may pan out

http://www.propertyinvesting.com/is-another-rba-rate-cut-imminent/?infuse=1

 

If the US Fed grows a set, and lifts their rates, it will change the game somewhat.
The market has, to some extent, already factored this in as being inevitable. However, consumers have not.
It will put pressure on our dollar.
China isnt performing on par.
Our inflation is low compared to where we want it. The only thing still growing is housing prices, and efforts outside of RBA rates are filtering through.
Business investent is non-existant.

I think we will see a rate cut before years end so I voted for Dec. In saying that the RBA loves to change rates on melbourne cup day, so I may be a month late.

But I agree with @Waldo. Even if the RBA drops rates, at best banks will only pass on what they lifted rates by a week or so ago.

Blacky

 

Damn

Damn it - I posted before I read this. Now it just sounds like Im repeating what you wrote

 

Hehe, its a timing thing On the same page though

 

Yup..if rba cuts, banks are not gonna lose- they have already raised recently . A cut would encourage more new customers to banks, despite them increasing recently.
What a great business model - hike up fees and wait for someone else to make conditions more favourable to you so as you may get more customers.

 

Banks make huge profits on rate moves. Either up or down, it doesnt matter. They win either way. The worst situation for them is long periods of stable, steady rates.

Since about 2008, the australian banks must have increased the spread on retail loans by about 2% (that is the difference between official rates, and the rates they charge clients).

Blacky

 

Abnormally low interest rates do a lot of damage, sooner they start rising in Australia (& globally) the better. I doubt the RBA will make any more cuts in the next year but who knows, they might do something silly. I reckon the next move will be up in a year or so, maybe early 2017.

 

I'm with @Casteller on this one. I'd like to see rates rise, if only to indicate that we're getting back to some semblance of normality.

I don't think that there's any great pressure to cut rates at present. The economy isn't in recession, and I get the impression that the RBA is concerned about a bubble in the residential property markets of Sydney and Melbourne.

My expectation is that they'll wait and see if the APRA changes on investment mortgages are biting first. Anecdotally they seem to be.

 

While I agree that holding rates low for the long term is damaging (ie - 0%in the US for 5++years) I dont see the current Australian rates too low - nor for a long period.

This is a 'hump' which Australia needs to work through. We are coming off an exceptional period of busininess investment - and we are falling into a valley (crevice) of potentially exceptionally low investment. Which is also damaging.

Low rates encourage spending - Credit is cheap, and $$ in the bank dont earn enough to cover inflation.

Blacky

 

I hope it will happen in November. The lower - the better.

 

Don't think there's a move until next year if anything. The AUD and oil price would be a swing factor

 

In the new year February after Christmas when every has spent all there money and maxed out their credit cards.

 

The RBA is a reluctant rate cutter.

I want to read their quarterly Statement on Monetary Policy (SoMP) due this month and how they're gonna forecast GDP and inflation.

Starting early this year, they used "market pricing" of interest rates to forecast GDP and inflation.

Currently, market pricing says 100% chance of at least one rate cut by Feb16.

Now if they're gonna use the market pricing assumptions to forecast GDP, what's the point of saying GDP will increase x% and not implement the market pricing assumption?

The RBA is in a Catch-22 scenario.
Damned if they do, damned if they don't.

 

62.8% calling a cut by Dec. 74.2% of people calling a cut by Feb.

FYI, sportsbet.com.au are offering $2.50 for up to 0.01-0.25% cut tomorrow

 

And the barrage of "savers" complaining about low interest rates will follow.

I mean, be smart with money and not leave it in the bank doing nothing!

 

I've still got a bet going at $1.40 odds that the next rate movement is down rather than up.
Depending on the odds after the next cut, I'll do the same bet again.

 

Rates will go up ONLY if inflation goes above 3% for a sustained period of time.

At the moment, inflation is anaemic. Core inflation (excluding the volatile items in the CPI) is threatening to breach below the 2-3% target of the RBA. It's a sign that domestic demand is weak, and if there's no stimulus it risks leading us to the Deflation Death Spiral that has threatened USA and Europe (and has caused Japan's Lost Decades).

 

If inflation stays low, the RBA might cut further.
http://www.rba.gov.au/media-releases/2015/mr-15-20.html

A new sentence was added to the statement this month:

"Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand."