RBA Cash Rate - 7 April

What will the RBA do at their next board meeting

Gaze wistfully out the window.

gr Wrote:
-------------------------------------------------------
> Gaze wistfully out the window.


LOL, but no, that is the RBNZ isn't it?

gr Wrote:
-------------------------------------------------------
> Gaze wistfully out the window.

Sounds more like the US Fed remembering the good ol' days.



Edited 1 time(s). Last edit at 03/13/2009 05:39PM by ORACLE.

Looks like markets are pricing in a 95% chance of a 25 point cut: [money.ninemsn.com.au]

Meanwhile, other economists are now predicting 50 point cut [livenews.com.au] including JP Morgan, which has moved from no change to 50 points: [www.livenews.com.au]

Do Australians have fundamental reasons to low interest rates and listen Fed's puppet JP Morgan? Especially when G20 will be served with chopsticks.

Seems as though the RBA is content at the moment
>>>>>
DJ RBA Dep Gov: Scope To Cut More If Circumstances Require

SYDNEY (Dow Jones)--There is scope to cut interest rates further in Australia but
policy measures already announced to combat the downturn will provide significant
support to the economy, Ric Battellino, deputy governor of the Reserve Bank of
Australia, said Tuesday.
"These measures will go a long way to offsetting the negative influences on
the economy coming from abroad, but the reality is that we cannot fully insulate
ourselves from what is happening elsewhere in the world," Battellino told an
urban development conference in Brisbane.
He acknowledged that the economy is likely to contract in 2009 as the worst
of the global downturn is felt.
"GDP is likely to fall in 2009," Battellino said.
But signs are emerging that stimulus efforts in China, Australia's largest
trading partner, are gaining traction and it is possible the worst is over for
the Chinese economy, he said.
Battellino's mostly upbeat assessment of the Australian economy suggest the
RBA remains satisfied for now that the economy will be supported by the monetary
and fiscal stimulus already announced. But the central bank remains ready to cut
rates further if conditions darken.
The RBA paused its policy easing at its March 3 board meeting and
Battellino's comments indicate that the length of pause could extend to the RBA's
next meeting on April 7.
Interest rate cuts of 400 basis points since September have been significant
and have helped spur housing loan demand, while cutting loan lending interest
rates to their lowest level in the postwar period, Battellino said.
The solid financial state of Australia's financial sector has also enabled a
substantial portion of interest rate cuts to quickly flow through to consumers
and business, he said, reiterating similar comments from other RBA officials.
Fiscal stimulus equal to 4% of gross domestic product has also been announced
by the federal government to support the economy, Battellino said.
"Australia will remain one of the better performing economies in the
developed world and be well placed to benefit from the renewed global expansion
when it comes," he said.
The worst of the economic downturn in China may have already been seen,
Battellino said.
China has "reacted with great speed and vigor in implementing monetary and
fiscal measures to stimulate their economy," he said. "There are some signs that
these measures are starting to work."
"While China is not going to return to a 12% growth rate any time soon, it is
quite possible that the past six months will turn out to have been the period of
maximum weakness in the Chinese economy. Of course, it will be a while before we
know one way or another," Battellino said.
The U.S. is making "reasonable progress" in addressing the crisis in its
banking sector, and there are rays of hope in recent economic data.
"On the (U.S.) real economy, we are starting to notice the odd positive
economic indicator in the run of U.S. monthly data, in contrast to the
universally negative outcomes a few months ago. Let's hope this continues,"
Battellino said.
Australia entered the economic downturn in better shape than many other
countries.
"It is not surprising therefore that, so far, we have weathered this global
downturn better than most," he said.

Can somebody please say reassuring words on this—I've bet big on there being a cut.

Either way, this is the *last* time I touch policy-rate stocks. Way, way too nerve-wracking.

I think investors are still pricing in a cut of some sort: [www.guardian.co.uk] [www.watoday.com.au]

I seem to remember last time about 12 of 16 economists (or close to) were picking a rate cut. And there was none. I think you should listen to what the reserve bank itself says as much as the analysts. Not that this helps much.

I agree, looking at all the other economic data released in the lead up to the rate cut should also be used to see the health of the economy, as this will influence the RBA decision.

Retail Sales figures out today for Australia are down 2%. Market was expecting to be down 0.5%. So that's a bit of a hit to their economy.

I'd sway towards RBA dropping 50 basis points on Tuesday.

Early January, Feb and March numbers all gave positive numbers for growth in retail sales so this is the first decrease this year.

building consents are up 7.8%, expected increase was only 1.5%.

i don't know if these numbers are enough to change anything. be interesting to see what the analysis is



Edited 2 time(s). Last edit at 04/01/2009 01:50PM by ltgorman.

Building consents tell you a bit about the approval for future construction.

But retail sales give you a good idea of how the economy is by showing the people in the country and whether they are spending money etc. It's the people of Australia and their spending that make a large contribution to their economy. I would think it less likely that the RBA would sit on their hands, I'm picking 50 points with 25 a close second.

13 of 16 economists picking at least 25 basis point drop.

[www.bloomberg.com]

ltgorman is correct...the aussie economists haven't been too flash at picking the RBA. The "worded up" journos were picking a pause in the articles they released overnight (one - McCrann - had been picking 50bps with near certainty previously). The 2% fall in retail sales comes after a cumulative 4.3% growth over the prior two months so doubt the RBA will be too perturbed about that. I lean towards the RBA staying on hold another month, with 25bps being the compromise move. The market closed today with just 22bps priced for the meeting.

[www.asx.com.au]
futures and options on Australian Securities Exchange
indicate almost certain that the cut to be 25 points to 3.0% official cash rate.
I wonder how much the manipulator pays all these "market analysts" to fool the public?

RBA cuts interest rate to 3 per cent

Although I think its quite obvious from the stocks haha.



Edited 3 time(s). Last edit at 04/07/2009 04:58PM by Osty.