Australian interest rates

Amusing isn’t it?

In 2020, we saw a blowoff in stimulus.

BofA with the note.

Earlier this week I showed how fixed rate mortgages have ratcheted up, rising by 0.48% (< 3 years) and 1.08% (>3 years) from their bottom last year: The story is different for variable mortgage rates.

By Gareth Aird, head of Australian economics at CBA. My view is that the RBA will wait until late in the year (after annual wage growth has risen above 3%) before lifting rates.

Westpac with the note.

RBA Governor Phil Lowe has just delivered a speech entitled “Recent Economic Developments”, where he pushed back against predictions of imminent rate rises, but noted that “it is plausible the cash rate will be increased later this year”.

Economics have warned that Australia’s inflation rate is likely to reach 5% by June, a level last seen in 2008 when the crude oil price topped $US160 a barrel.

This is some monetary egghead stuff but it is very important.

Or is it the other way around?

Goldman with the note.

A still dovish RBA: At its meeting today, the Board decided to maintain the cash rate target at 10 basis points and the interest rate on Exchange Settlement balances at zero per cent.

Goldman with the note.

As we know, Wednesday’s wage price index (WPI) disappointed expectations, recording only 2.3% annual growth in the 2021 calendar year: With the RBA seeking wage growth in excess of 3.0%, this soft result all but squashed the notion that the RBA would lift the cash rate by mid-year.

Yesterday’s wage price data from the ABS was a bitter pill to swallow for those proclaiming a wage-price outbreak.

The Australian bond market has departed Planet Earth and is now trading somewhere in the outer Oort Cloud.

Australian wage growth missed the RBA’s expectations in the December quarter of 2021, according to new data released today by the Australian Bureau of Statistics (ABS).

The Reserve Bank of Australia (RBA) has repeatedly stated that it will not raise interest rates until wage growth has sustainably risen above 3.0%.