The RBA Says Rates Are Going To Rise Further…

Reserve Bank of Australia governor Philip Lowe appeared on the ABC’s 7.30 television program last night. I cannot recall the last time an RBA Governor did this – which to me signifies the importance of the event at this critical and uncertain time.

Overnight again the US markets mostly slid, ahead of the Federal Reserve rate decision tomorrow. Views that a 75 basis point hike was on the table have been growing after Friday’s higher-than-expected consumer price index (CPI) data for May.

Governor Lowe said inflation will peak at a “very high” 7 per cent later this year, and ease back next year. Dr Lowe said it was “reasonable” to expect the cash rate to eventually reach 2.5 per cent, in line with the midpoint of the inflation target, but he admitted it was “unclear” how high rates would go and how quickly.

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  1. The RBA can raise yields as long as there is no convertibility crisis in money markets at the 'AAA' end. At present spreads there are still modest. Spreads at the 'BBB' end have widened substantially, hence stonks taking a hit and highly indebted builders going under, but that's ok for the RBA bureaucrats in their Martin Place fortress.

  2. Imo RBA has done a great job, they pumped inflation and pop goes the housing bubble.

    Sorry bro if you work in administration you cant afford a million dollar house.

    Sure its going to hurt in the short term, but the recovery will be great, and young families will be able to afford houses again.

  3. I just about spat out my drink when Lowe said inflation will peak at 7% (as if he knows!), it’s already (officially) well over 7% in WA!! Tell him he’s dreaming!

  4. 2.5%, Tell him he is dreaming. When our banks have to enter the real world they will be paying a lot more than this, the US 2 year rate is about to invert the 10-year @ 3.3% at this time and is not to get better for a while.

  5. A bit of inflation is a good thing… allows house debt to reduce the “real” value of debt, enables larger rent increases on property assets. The federal govt debt can be inflated away too.

  6. Whilst Lowe seemed very out of touch with reality, house prices do need to go down. Whilst it sux to seeing my Super go backwards, I hope it's for the greater good. Just hope this pain is not in vain.

  7. Again…Peasants will sadly suffer as a direct consequence of the incompetent Governance of their corrupt Overlords. The treachery of our Government is unforgivable. It’s really shocking to see how negligent our Leaders are in the basic fundamentals of Government… food, water, energy, housing, medical, economy and defence.

  8. Quantitative population growth can't be supported on a finite planet. Applying the current reasoning on Mars fails to solve the underlying flaws in presumption.

    Eat the elite and fertilise the garden with liquid sheep…

  9. Are central bankers confusing squeezed cash flows with the “wealth effect”? When deflation struck the UK it was a result of squeezed incomes not the falling value of property, because otherwise it would only impact property owners.

  10. Interest rates of almost zero should only have been possible alongside restricted lending. Massive debts could have been avoided this way and for that, the government and authorities were irresponsible.

  11. Lowe needs to drive a truck or something where he can see the true effect of inflation. This shows that the reserve bank of a mechanism for the rich. Who is he representing? Not us. Stimulus should have been stopped. Job keeper, looks like bail outs for big business. Socialism. 2022 was 2008/9 again. So who is moving the gears? This has never been about the little guy, or Mr Inbetween.

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