RBA strike with interest rate rise to 3.25%
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The Reserve Bank Governor Glenn Stevens hiked rates today by 0.25% to 3.25% on the back of strengthening signs of economic recovery and rising concerns at the RBA of potential inflation risks from low interest rates.
The rate increase, the first since April 2009 when rates were decreased to 3.00%, signals a move by the RBA to limit the possibility of rampant inflation on the back of historically low interest rates. The move is not likely to be the end of the cuts with talk already of another increase on Melbourne Cup day in November.
All big banks are likely to pass on the rate increase promptly.
What do you think interest rates will go up to by the end of 2010? Share your thoughts in our comments section.
RBA keep rates steady
The Reserve Bank of Australia (RBA) kept rates steady at a near 50 year low of 3.00% yesterday amid increasing levels of positivity about the state of the Australian economy.
Glenn Stevens the Reserve Bank Governer indicated the RBA still had room to reduce interest rates should the need arise due to the marginal impact of inflation in the current forecasts. While Glenn Stevens indicated the RBA still had scope to cut rates the general tone was positive and the state of the Australian and global economies would have to further deteoriate for the RBA to consider a cut.
It is highly likely we have either seen the bottom or are with 0.25% of the bottom of the cycle. Some forecasters are already looking at an increase in early 2010 as the uptick takes hold.
RBA decision to keep rates stable raises questions
The RBA this week announced that interest rates to stay on hold this was met in some circles with applause and others questioning the logic of RBA governor Glenn Stevens.
Despite the economic performance of Australia faltering it is still comparing very well against fellow OECD countries and has arguably stood up as one of the best in the current downturn.
It is this performance while still a contraction in economic growth that helped determine the RBA board decision to keep rates the same at 3.25%, a 45 year low. Interest rates have been forecast to fall to around 2% this financial year but we are unlikely to see any big cuts like 0.75% and 1.00% as the RBA expects the stimulus to support the market in due course.
Do you think the RBA made the correct decision in not cutting rates in March? Share your thoughts by adding a comment.
RBA to slash rates
The Reserve Bank of Australia is expected to slash rates by 100 basis points this week as the Australian economy is in recession and looking down the barrel of a world economy that has badly derailed.
With the world in recession the RBA will need to act swiftly to reduce interest rates in a move to boost domestic growth and inspire confidence in a domestic economy that badly needs a boost amid rising unemployment and falling consumer spending.
With inflation no longer the problem, that it has been in recent years, the brake is no longer on Glenn Stevens allowing him to act decisively to boost domestic growth. The Australian government are also likely to support the domestic economy with another rescue package expected to be announced in coming days.
Australian Bank Watch will announce the rate cut when announced this week.
Australian Bank Watch Changes
I have made some minor changes to the Australian Bank Watch site. You will note on the left hand sidebar I have expanded the selection of variable home loan rates to include a number of leading Australian banks outside of the top 4.
I have also added the cash rates for the US Federal Reserve, European Central Bank, Bank of England, Bank of Japan and Reserve Bank of New Zealand. These complement the existing Reserve Bank of Australia cash rate that is also displayed. This will help visitors more quickly make a comparison between global central bank interest rates.
I have importantly added a date for when the interest rates were last revised. This should only be used as a guide and the interest rates should always be checked on the bank website which I have links attached for ease of navigation.
It is difficult to keep up to date with all the interest rate changes and they are quite liquid at the moment so I thought it wise to revisit the date I last updated. I will revise these on average once a month but also will update upon any Reserve Bank rate decision.
I have also expanded the links to a number of additional banks that were not previously listed and links to the major central banks.
I hope you find the changes of use and please direct any feedback or things you thing Australian Bank Watch should include to wes@ausbankwatch.com
Happy New Year!
Inflation plummets
Inflation fell by it’s biggest amount in six years further locking in hopes for a 100 basis point cut by the Reserve Bank this week.
Economic data also confirmed manufacturing fell each of the last six months to a record low as the declining economic growth further confirms a sharpening contraction.
Some economists are now predicting levels around 2.50% to 2.75% by the middle of 2009 as Australia verges on recession.
RBA Minutes of Monetary Policy for November 2008
The Reserve Bank of Australia released it’s minutes from it’s monetary policy meeting on 4 November 2008 today.
These minutes always make for interesting reading but even more so at a time when the economic environment is as dire as it is today.
Click on RBA to read the minutes from the Melbourne Cup day meeting when interest rates were cut.
Bankwest offer 5.99% Fixed Rate
Bankwest has unveiled a two year fixed interest rate home loan at 5.99%, 0.60% better than it’s nearest competitor to force the competition back on the larger banks.
Bankwest’s fixed home loan rate below 6% on a is the first time a fixed interest rate has been this low since September 2003.
Bankwest have also cut a host of their fixed rate loans with their one year fixed dropping by 1.40% to 6.29%.
The Bankwest loan rates take effect from 17 November 2008. Expect the other major banks to follow in coming days to maintain market share in the current competitive climate.
Click to read the Bankwest Media Release.
RBA look to another 1% cut in December
The RBA will almost certainly cut rates again by 100 basis points or more after economic data from Australia and around the world is pointing to a global recession.
Last night Europe announced that the 15 countries that make up the Eurozone has fallen into recession amid worsening economic conditions.
A day earlier the economic powerhouse of Germany announced they had fallen into recession amid the global crisis of confidence affecting markets.
The fear of ongoing job cuts around the world driven by corporate cutbacks is now widespread with acute pain being visable throughout Europe and the US. The fear and panic their has spread to other regions and Australia may be heading down the same path.
Australian markets have been savaged over the last six months and consumers have stopped spending hoarding available cash in case of job cuts or harder economic times ahead.
This fear will force the RBA into another major rates cut in December that could see 100 basis points cut from the official rate to 4.25%. More cuts will follow next year as the economy is expected to experience a very tough 2009 amid corporate job cuts and record low consumer confidence.
How big do you the December rate cut will be? Add your comment today.
NAB Business Survey reveals business confidence at record lows
Australian business confidence continued to fall in October as fears of a growing global recession impacted heavily upon the outlook of the domestic economy.
The monthly National Austalia Bank business survey revealed that confidence fell 21 points to minus 29, the lowest level since the survey began in 1997.
The survey which showed a fall in confidence across all major sectors indicates that falls on stockmarkets and the prevailing negativity in the press regarding the global economy have finally taken their toll on business confidence.
NAB indicated their expectation that the Reserve Bank wil cut rates by another 75 basis points in December and a further 75 basis point cut in the first three months of 2009. This would take the RBA cash rate to 3.75%.