Wrongly wrong Bloxo pushes out rate hikes

From the AFR:

HSBC has cut its Australian growth forecast to 2.4 per cent from 2.6 per cent for 2015 because of lower expectations for Chinese economic growth and a lack of investment spending by businesses, which it sees as part of a global phenomenon.

Paul Bloxham, HSBC’s chief economist in Australia, now sees the Reserve Bank of Australia staying on hold for all of 2016, removing his forecasts for rate hikes in the second-half of next year.

Australia is not unique in experiencing a lack of business investment. The United States is consistently falling short of its growth expectations because of an absence of investment, argue HSBC economists Stephen King and James Pomeroy in new research.

This is the fourth or fifth time for this push back. Let’a face it, Bloxo, rates are going to fall.

Comments

  1. sydboy007MEMBER

    How many times can you get it wrong before you have to admit you just don’t know?

  2. He might not be wrong. Eventually bond holders will view the falling currency against the yield and, since there are no Aussies with net savings, they’ll demand higher rates.

    Interesting story on ZH today about QE failing in Sweeden. The conditions aren’t all that dissimilar here – especially if, like any Chief Economist you grab your ruler and extrapolate trends.

      • Fair point Lorax. It’s needed sooner or later… Or more than a decade ago IMO. We’ll all deal with it just like the winners & losers RE haves / have not situation we have now. All I want is action-consequence for the leveraged and mean reversion in prices.

    • “He might not be wrong.”

      He’s already been wrong for three or four years and counting.

  3. Not everything goes to plan! Lower interest rates is the call? Go for it…..
    “The financial conditions — the currency and the bond yields — are moving in the wrong direction,” Roger Josefsson, chief economist at Danske Bank A/S in Stockholm, said. The assumption is that “the Riksbank wants yields to go down and the krona to weaken, but it’s been the opposite direction recently. That should pose a problem.” http://tinyurl.com/ploato
    (Apologies myne! Didn’t see you’d beaten me to it!)

  4. Whoever thought that a lack of forseeable demand might result in…

    … “a lack of investment spending by businesses, which it sees as part of a global phenomenon.”

    That erosion of demand on account of the erosion of low/middle income earners being squeezed so tightly. Is trickle down your leg economics dead yet?

  5. Further on in the article…apparently the residential investment boom that Bloxo is continually cheering on here hasn’t been such great news for the US.

    Not sure why MB has just linked to the AFR home page, but here’s presumably the same article at The Age. http://www.theage.com.au/business/the-economy/hsbc-removes-rate-hikes-as-capex-fades-china-slows-20150626-ghy73f

    “While it’s convenient to blame the global financial crisis for a dampening of Keynesian animal spirits, we show that, at least in the US, the problems began a lot earlier,” the economists say. “Although overall US investment held up well after the 2000 stock market crash, this was only because of the housing bubble. Non-residential investment has now been disappointingly weak for the last 15 years.”

    • Hilarious terminology when “hikes” is associated with the 2nd lowest rates in history.

  6. reusachtigeMEMBER

    Bloxo is one of the best exonomists because he is from a bank so he knows how important positive thought is to ongoing housing finance. Youse have no idea because you’re poor!