Will rates drop further today?

Being ‘D’ day, the AUD is set to have a HUGE RALLY !

Just look at the price action of the past few days. Sold down in anticipation of the RBA belatedly, behind the curve significantly, finally reducing the official cash rate to 2.00%.

Will this save the Australian economy? No, but it will help. Finally getting to 2.00% is likely to get significant media attention and this will help encourage improved investment and consumer sentiment.

It will take a long time of keeping rates at 2.00% however, to make up for the atrocious policies Stevens and his gooses have fostered on the Australian people. Remember the mountain of high rates which destroyed the domestic economy in 2009/12.

Fortunately we are in Asia. Imagine if we were not resource rich though. A doomed society for sure. Thank you Asia for saving us from ourselves!

Speaking of which, on-going Asian resources demand is likely to continue to carry the Australian dollar higher. Our bullish AUD outlook has been proving correct, finally, of late.

The AUD belongs much higher fundamentally.

That Glen Stevens believes the fundamental value is lower,
greatly encourages my bullish view.

Overall the Australian economy remains the great embarrassment of Asia, but from a currency perspective the yield is still high by comparison to the USA, and demand for our commodities remains incredibly strong.

Just keep buying,

Clifford

Clifford Bennett
Chief Economist bT

5 comments

Auction Clearances still pumping

Holding around record levels. 87% in Sydney. 83% in Melbourne. Tubthumping. The market has never seen anything like it.

House prices strong, but increasingly Sydney-centric

Latest RP Data shows Ozzie houses growing at 8.1% y/y. But Sydney is the main story, growing at 14.4%. Melbourne gets silver at 7%. Bris gets bronze on a barely also-ran 2.5%. Perth was flat. Darwin fell.

 John Gian 

Negative Gearing Aussies approach critical mass

According to the ATO, there are now 1,967,260 negative gearing property investors across Australia.

Whatever you think about neg gearing, 2 million voters is a political force to be reckoned with.

John Gian 

I know everyone says rates will drop today but I wonder?

Typically, when interest rates fall, the aussie dollar drops.

KFC that isthe idea to drop rates so as to make the Australian Dollsr less attractive. So the rate against the US dollar drops making us more competitive and imports  dearer..and in pound tourism cheaper..

But that ignores what other countries are doing . We are still a very attractive country to invest in ,,So IMO the dollar will rise.  

Oh, well, I was wrong.   It is now down to 2%.  No doubt more will race out and buy properties that they, in the long run, will not be able to afford once the rates go the other way.

I don't agree Radi I don't believe that the Australian investors are stupid. 

5 comments



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