Australian interest rates

A nice note here from Bill Evans at Westpac: For the last two weeks, I have been in the US visiting investors; hedge funds; corporates and officials.

I was once a fan of Mr Lowe.

Via Martin North: Today the CBA has announced changes to some mortgage rates: interest only home loan rates for investors will rise by 12 basis points and Viridian Line of Credit (VLOC) products will increase by 4 basis points.

From Domainfax: Macquarie Bank property borrowers will have to disclose their spending on everything from footy to fashion under tough new credit rules about to be introduced.

Via David Uren: The IMF has urged the Reserve Bank to slash rates in a much more pessimistic analysis of the outlook than presented in the bank’s latest forecast, arguing the economy is at risk of getting caught in a Japanese-style low inflation and low growth trap.

Oh dear!

From Bubble-o-Phil today: To this: This year’s growth has been shredded but worry not, the RBA always has a future boom at hand and despite a poor H1 this year, H2 is going to rocket to deliver an unchanged result of 3%.

From RBA head, Backbone Phil, today: I would like to offer you all a very warm welcome to Sydney for the A50 Forum.

From Bloxo: The tailwind is here.

“Backbone” Phil as I call him yesterday delivered the most forceful hold in interest rates that I can recall in weak circumstances: Conditions in the global economy have improved over recent months.

From Westpac’s Bill Evans: As expected the Reserve Bank Board decided to hold the overnight cash rate unchanged at 1.5%.

No hint of easing here: At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

From Domainfax: Independent economist Saul Eslake says that if you see the rebound in investor lending as a concern, there are three options on the table.

Macquarie is spot on:  The February Board meeting will consider updated forecasts for growth and inflation before making the first rates decision of 2017. Over the days that follow, the RBA staff will make adjustments before publishing the February Statement on Monetary Policy (SoMP).

Via the AFR: Lenders are blaming rising wholesale and regulatory costs for a new round of increases in fixed and variable products by up to 60 basis points.

From the AFR comes the always excellent Tim Toohey: The probability the Reserve Bank of Australia raises interest rates in November this year is “somewhere in the 40s and rising” according to Goldman Sachs, which forecasts New Zealand rates to rise at the same time.

Says Capital Economics: If Paul Dales is right the Reserve Bank will cut the official cash rate to 1 per cent later this year.

2017 will bring financial conditions in Australian mortgage and housing markets never seen before.

Cross posted from Digital Finance Analytics by Peter North We have updated our analysis of how sensitive households with an owner occupied mortgage are to an interest rate rise, using data from our household surveys.

We all know that Australia is secretly an emerging market (EM), characterised as it is by dodgy governance, a resources curse, rent-seeking, asset bubbles and weak external accounts.

It ain’t just China!