Kouk and MB alone in forecast rate cuts

Via Forexlive comes the latest Bloomie consensus survey on rates:

Kouk and MB all alone.

Comments

  1. 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.

    • 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.

      • 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.

  2. 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.

  3. 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.


    • 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.

      • 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.

    • 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..

      • 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

        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.

    • 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.

      • 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.

      • 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!

      • 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

      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.

      • 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.

    • 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.

  4. 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…!

  5. Jumping jack flash

    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.

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