Share on Facebook Share on Twitter Share on Reddit + - Kouk and MB alone in forecast rate cuts By Houses and Holes in Australian interest ratesat 2:46 pm on September 14, 2018 | 36 comments Via Forexlive comes the latest Bloomie consensus survey on rates: Kouk and MB all alone. Share on Facebook Share on Twitter Share on Reddit + - YOU MAY ALSO BE INTERESTED INEconomists slowly warm to rate cutsBy Leith van Onselen Slowly but surely,UBS: Rising risk of RBA capitulationFrom George Tharenou at UBS: ...a broadeningThe Aussie economy is quietly falling apartYou'd have to be as blind as the RBA to miss theHapless Goldman hoses Aussie bondsVia the AFR: When looking back at asset Comments Robert September 14, 2018 at 2:54 pm Seems like it could go either way – on the one hand, the Aussie dollar is under a bit of pressure, far from guaranteed it won’t get worse, on the other, the desire to can kick further by slowing down property market falls is strong in this one. Like a wise man once said, prediction is hard, especially about the future. MulDon September 14, 2018 at 3:01 pm Economics is not a democracy. Economists, like all other humans follow fashion, and are herd animals. If you work for a major institution, it’s also safer for your career if you follow the herd. If you’re wrong in your predictions you can always excuse yourself by saying to your boss that everyone else was wrong too. It takes courage to stand out and think independently. Robert September 14, 2018 at 3:12 pm No doubt that’s true, but it doesn’t mean that you can infer anything about the accuracy of a prediction due to how popular or not it is. At least some of the time, an professional opinion will be unpopular because it’s simply incorrect. StephenMEMBER September 14, 2018 at 2:55 pm Koz youse are rong dood. MulDon September 14, 2018 at 3:04 pm Personally, I wish the RBA board members had a register of assets like politicians. RBA members disposing of their investment properties would be a good sign that they want to raise rates. This would be a good “skin in the game” signal. hellonathan September 16, 2018 at 8:11 pm Close, a register of assets and liabilities. NikolaMEMBER September 14, 2018 at 3:05 pm I know I am no one but I always dared RBA to try to hike once or twice when they were making loud noise about hiking. So for fun if nothing else, you could have had: Kouk, MB and our resident Wog.. Matter of fact, yesterday we debated (at work) if IRs are going up and I was the only voice saying the only way is down – short term 6-12 months. Question: if FED keep hiking into the year and 2019 and AUD keeps falling, wouldn’t that trigger inflation that will prevent RBA to hike or at least limit RBA to just one cut? Maybe prolonged no move in IRs is on the cards? We might be looking at RBA not being in a position to cut as that will fuel even high inflation nor they can hike due to massive private debt which will send most households into the abyss. Robert September 14, 2018 at 3:21 pm Maybe prolonged no move in IRs is on the cards? We might be looking at RBA not being in a position to cut as that will fuel even high inflation nor they can hike due to massive private debt which will send most households into the abyss. In that regard it seems worth noting that 1/3 of the surveyed instos reported above forecast rates on hold through to the end of ’19, so while not the majority opipion, not especially rare or contrarian either. P13MEMBER September 14, 2018 at 3:25 pm Exactly, f’d if they hike to defend the currency, f’d if they don’t. Best do nothing, 1.50 forever! Robert September 14, 2018 at 3:39 pm The risk is they decide they have a preference on how they are to f ked and jump that way, deeming that a rogering to end all others is simply inevitable. PessimistMEMBER September 14, 2018 at 3:09 pm H&H Can we run a poll among us economically enlightened folks to see which way it is going to go,my vote is up Peachy September 14, 2018 at 3:17 pm Yazz called…. [email protected]MEMBER September 14, 2018 at 3:22 pm going nowhere for me Timeframe 5yrs NikolaMEMBER September 14, 2018 at 3:22 pm the moment they hike game is over. It may happen, if inflation starts to run away, but it will be absolutely last resort. In that case we should all have solid gold and keep it at home and guard it with our own weapons. MPs kicked way to late. There are way too many people that are over leveraged. My view is that about 70% of all mortgagees can’t service their loans with only one person working. I’d say about 50% of all mortgagees can’t survive 2 hikes especially if these hikes are coming to tame inflationary pressures. This is just a pedestrian view from what I hear from friends or people at work, pubs, functions.. liquid snake September 15, 2018 at 11:05 am Bollocks. U crashtards always say the game is over as soon as we get a hike…yet banks have just raised rates themselves and the effect has not been disastrous. How fkn blind are u numpties? Jumping jack flash September 17, 2018 at 3:45 pm That teensy tiny rise is just to blow away the cobwebs. Stress testing. If the debt junkies can’t endure what paltry rises we’ve seen so far then they deserve to go bust. Obviously, those few that do go under were all the bad eggs and the remaining ones that don’t go bust are good risk. Then the banks can go back to their banks and tell them the good word – that the problem is contained. And then they can roll their debt over for the same price as last time. Its all about risk minimisation, sleight of hand, grifting, and smooth talking. Hardly surprising, because devoid of any inherit value, our money is completely based on the belief that it is real, and worth something. GavinMEMBER September 14, 2018 at 4:01 pm In the next year, it will remain on hold. I don’t see them hiking (into a falling housing market). I don’t see them cutting (in a world of higher rates). I see them HODLing until they are blue in the face. NikolaMEMBER September 14, 2018 at 4:21 pm of the same view even though, 2 months ago, I was sure they will cut. But I always laughed when RBA and rest of the clowns were sounding hikes. Though, Robert above makes sense too so who knows. Arrow2MEMBER September 14, 2018 at 4:56 pm Yes. They will hold until forced by external events or the bubble has deflated slowly. The former means a crisis has happened, could be any time. The latter would take years and years and would require nothing bad in the meantime. Seems unlikely! jc2610 September 14, 2018 at 5:53 pm Going down is a signal that everything is going to sh!t. Raising is a signal that we are part of a global economy and we are smart just like them. So even if it is the smallest of increases … we are smart and things are bad (so we want you to believe). MediocritasMEMBER September 14, 2018 at 4:53 pm It’s hard for us plebs to call it without having an inside look at how much borrowing by Australian corporations is actually foreign-sourced. How much liquidity is there, how much is hedged, what is the duration and how does the volume compare to purely domestic borrowing? (A lot of “domestic” borrowing is actually international with a local bank intermediating between local borrower and foreign lender). Oz is out of phase with the world economy. After the GFC, we stayed relatively strong with higher rates, meaning that a carry trade set up on the AUD and Oz borrowers gorged on cheap international finance. Both factors kept the AUD exchange rates and asset prices high. Now this is inverting. If the RBA cuts then it will invert even faster, potentially causing a crisis for institutions that are heavily exposed to foreign borrowing. If it raises to facilitate a more controlled rebalancing, then it runs the risk of triggering a crisis amongst those who’ve borrowed domestically. The RBA’s in a lose-lose situation, trying to control damage to two competing parties. Chances are it’ll hold rates steady for as long as possible until one of the parties blows up first. MulDon September 14, 2018 at 5:05 pm One also wonders how much the banks have borrowed overseas to lend to Australian home buyers? How much of this is hedged, and for what term? The Royal commission into banking might also raise attention to the possibility that many home owners cannot afford to pay back the loans. Overseas lenders might realise that Australian banks are more risky and charge our banks higher rates in future. DivyaMEMBER September 15, 2018 at 8:36 am Hold until their face turns blue but may need to be forced to jack rates up to support currency I think. Will be interesting to see what happens actually. But how about I say I guess that when they move they will move up. Gotta make a bet either way. The BurbWatcherMEMBER September 14, 2018 at 3:18 pm I say flat until data gets worse, then down. I think the RBA believes rate rises will crush the economy via housing… My 2c kodiakMEMBER September 14, 2018 at 4:18 pm This is correct. Chris Becker September 14, 2018 at 4:16 pm Best caption image in a long time….in case you’re all wondering the professional in the image is MB, not the other guy with his hat and cigar… kodiakMEMBER September 14, 2018 at 4:19 pm Klugman was funnier. Janet September 14, 2018 at 5:47 pm …but not as Quincy, ME… ErmingtonPlumbingMEMBER September 14, 2018 at 9:08 pm Your showing your age there Janet,…I used to watch Quincy MD with my Grandmother as a Kid,…I was pretty sure at the time she had the hots for him. Max September 14, 2018 at 7:41 pm You two should get a room 😉 jc2610 September 14, 2018 at 5:48 pm About a year ago … wasn’t kouk spruiking a rate rise? I remember there was a bit of a back-n-forth between MB and the kouk on rates? McPaddyMEMBER September 15, 2018 at 7:36 am Check back in a few weeks. He’ll be saying it again. Arrow2MEMBER September 14, 2018 at 6:33 pm Well, I figure if you are short AUD you’re covered for a surprise rate cut and if you don’t own a house (but would like to) you’re covered for a bubble-popping rate rise. Main question is what to do in the meantime… at least 18 months…! Hill Billy 55MEMBER September 14, 2018 at 9:34 pm The new normal after the collapse will be the old normal, so they’ll eventually raise. No cuts beforehand though. Jumping jack flash September 17, 2018 at 1:00 pm after the collapse there won’t be anything left to normalise. Maybe the government will get back into the banking game? Jumping jack flash September 17, 2018 at 12:55 pm No rises or cuts for 30 years. Unless of course the rest of the world goes to hell in a handbasket before then. Wouldn’t it be funny if little old Australia’s gigantic, world-class debt bubble triggered another GFC? Extend and pretend, the whole way, until the debt is repaid. The houses are worth whatever ridiculous amount we say. If prices drop too much due to panic selling, start foreclosures then sit on inventory and report its value at whatever the last value was to preserve LVR.