Australian interest rates

Via Nordea: Modern Monetary Theory has drawn attention from the public as well as in academic circles, but why the fuss?

The Australian dollar took off last night after the FOMC meeting concluded with a dovish statement.

Will the Fed panic this week?

Mizuho Chief Market Economist Yasunari Ueno: The chief duty of most central banks around the world is the maintenance of price stability.

Via Kieran Davies, Chief Macro Strategist, Coolabah Capital Investments: RBA Governor Lowe delivered a very important speech yesterday on “The recovery, investment and monetary policy” at the AFR’s business review conference.

When MB first proposed macroprudential policy tools for Australia in 2011, we were looked at like we were from Mars.

Last week’s national accounts release for the December quarter revealed that Australian households accumulated a record $187 billion of savings in calendar year 2020 as they cut back spending (due to COVID restrictions) and banked enormous amounts of stimulus.

I have been musing on the likelihood of a new taper tantrum for months.

As we know, the RBA is on record saying that it won’t raise interest rates before 2024 and that it is quite happy for house prices to rise for the economy to enjoy the economic spillovers.

As expected, the Reserve Bank of Australia (RBA) held the cash rate steady at 0.10% today and reaffirmed the parameters of the Term Funding Facility (TFF) and bond purchase program.

A fash note from Kieran Davies at Coolabah Capital: After defending its 3-year bond yield target last week, this morning the RBA doubled its QE purchases of Commonwealth bonds.

The RBA meets tomorrow amid some serious bond market and yield turbulence.

What next for bond and stock market crashes?

We noted this week that mortgage applications are now so hot that banks are unable to keep up and approval times are blowing out spectacularly.

What a business cycle this is.

More interesting ruminations from a slightly less bullish Goldman Sachs on how to hedge inflation.

Markets are today busily repricing the prospects for interest rate rises around the world.

Via the FOMC: Despite a sharp spike in unemployment since March 2020, aggregate wage growth has accelerated.

I noted earlier that the US inflation panic is likely to drive yields higher yet.

From the always worthwhile George Tharenou at UBS: We expect the RBA to tweak its QE operations At their meeting in February, the RBA extended QE and told markets they will continue to buy $5bn/week of bonds until September.

Fresh from the central bank: Christopher Kent, Assistant Governor (Financial Markets) Introduction Today I will discuss some recent developments in the foreign exchange market, and provide some views on the role of the Reserve Bank’s various policy measures.

Will the RBA upsize QE at ay time?

As we know, the world enjoyed an unprecedented K-shaped recovery last year as goods boomed via stimulus and work from home.