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Today’s The Day…

The RBA is widely expected to lift the cash rate again today, perhaps to 1.35% — a level not seen since May 2019. Market Economics is forecasting a larger 75-basis-point move.

The RBA is behind its peers, having held rates near historic lows until increases in May and June that lifted its benchmark by a total 75 basis points to 0.85%. A 50-basis -point hike on Tuesday would mark the first time Australia has hiked by that amount at consecutive meetings.

Morgan Stanley, expects 50-basis-point increases in July and August, followed by quarter-point hikes through to November, taking the cash rate to 2.6%.

“Broader slowing of jobs and inflation won’t be felt until late this year, keeping 2H22 rate hikes on track, even as risks grow for 2023,” he said.

You can join my live show at 8pm Sydney when I discuss the outcome with Chris Bates, mortgage broker in Sydney. https://youtu.be/xur8dSSFcTw

Go to the Walk The World Universe at https://walktheworld.com.au/

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Written by Walk The World

Comments

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  1. @walktheworld I hear all this commentary about CB’s pivot and inflation falling when recession hits. If we are in stagflation then cutting rates will cause even more inflation. CB’s forced to hike in to a recession.

  2. RBA lends Government 1 trillion dollars, then we get inflation and the only solution is raise bank interest rates.

    Let’s hope lettuce, petrol and cost of living comes down.

  3. You and your winter of discontent scars. Youall just guessing aren't you. Freestylin.. stream of troubled concsciousness stuff. Too afraid of even the offering the simplest of syllogisms to justify/explain what the RBA will do. Notice that Mr. North about these Senior economists? Tick tock, to stomp, stomp, stomp.

  4. Standard economist and pundit take: "Rates can't be raised the way they were when inflation was at 17% all those years ago because people are more indebted nowadays!!" Sorry but inflation does not care how indebted you are. Not that I think that the cash rate will need to get anywhere close to where it was in the early 90's but if this inflation is very stubborn I think people are going to be shocked at where the cash rate ends up going, debt bubble be damned.

  5. If they wanted to return to a quarter percent multiple, then it should be a .65 rise. Anything less means they're not taking the problem seriously enough in my opinion.

  6. Everybody, stop spending now. If we all did it we, would achieve the same result as curbing inflation with higher interest rates. Better it be in our pocket that the banks.

  7. why doesn't the RBA raise the interest rate by smaller more consistent intervals every single day?

    instead of a 0.25% interest rate increase
    a 0.01% interest rate rise every single day for 25 days?

  8. a fun fact , one thing the govt COULD do is say , no loans above 3x income , that would not inter fare with a free market , as the 3x income would be the boundrys of the free market

  9. They should raise it faster so people can make an informed decision quickly rather than using up all their resources to save an overpriced asset.

  10. It’s was always going to be.50 a month. August will be .50 rise as welll! Inflation Is actually higher than the figures suggest by the bureaucrats that are well paid but work on old economic theories!

  11. It's tricky, They have to be seen by the public to be doing something about inflation.
    Governments like inflation.
    The populist doesn't.
    And the RBA really is just another interventionist organ which we can do away with. We don't need a central bank.
    The more central banks intervene in the currency. The more things go reactive. Boom and bust is a reaction which is entirely produced by interventions.
    Interventions are entirely produced by people with good intentions thinking that they're doing something that will "help".
    The biggest help that you can do is leave the market alone and let it find its own level. The price of money can easily find its own level against the demand for money.
    The whole of the housing crisis began back in 1982 when it was opened up to the international market, namely the Japanese who invested hugely.
    Now the housing sector is seen as a de facto superannuation fund and nest egg for huge percentage of the population, especially the boomers.
    That's why the RBA wants to be seen to be doing things. The government wants to be seen to be doing things. What they really don't want to happen is for all all of that potential money to go down the toilet, which it might.
    When you're gambling, you're gambling and if it's not gambling, it's not called speculation and all of this is speculation. That means it's up for grabs.

  12. Mr Lowe blaming inflation on the war in Ukraine, when we know inflation has been running rampant for the last 10 years or more, my pay has not gone up in 10 years

  13. Every cash rate cut was a mistake, every raise is the same mistake repeated.

    Lead poisoning is the only reasonable assumption for why our overlords act half lobotomised…

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