Hey everyone
One of the most pressing questions at this time every month is…will the RBA raise interest rates?
Whether it does or does not will be revealed next Tuesday. However notwithstanding the RBA’s decision, I believe there is a far more pressing question: will the banks raise interest rates independent of the RBA?
For what it’s worth AND it’s only my opinion, I don’t believe the RBA will raise rates next week – a BOLD statement I know. I’m convinced there are very good reasons not to do so including a manageable rate of inflation and reasonable unemployment numbers. However there is a much more important reason to (at least) postpone any rate rise; and that is (as the infamous John Laws once…or twice said), those folks in ‘struggle-street’ are really struggling.
I get around a bit and speak with both business people and investors AND I can tell you many are struggling to survive, let alone grow their businesses and/or investment portfolios.
Regarding the far more pressing question mentioned above, unfortunately I have a very uncomfortable ‘gut-feeling’ that the banks are about to move rates up. And this contention is gathering momentum. Commonwealth Bank CEO Ralph Norris, at its annual general meeting, highlighted the increasing costs of funding…usually a clear indication that a decision has already been made. This also signals to other financial institutions that a rate rise is in the wind.
Be interested to know the thoughts of others.
Cheers
GarryWith the Melbourne Cup on tomorrow, I don't think there will be any chance on an adverse announcement.
Conflicting data, especially over the last 5 days will put a neutral stance on it.
Good chance December though….they go on holidays January, unless there's some terrible data locally and/or globally around Xmas time.
Interestingly enough the RBA had increased the official Cash Rate in the December meeting 2 out of the last 3 years so no Christmas cheers here.
Whilst i dont think we will see a rate increase tomorrow i wouldnt put it past the Big 4 Banks to raise their variable rate within the next 30 days. These higher funding costs are killing their profits ……..
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Now we know. I was rather surprised by the RBA’s move BUT not at all surprised by the ‘BIG 4’. My hope is that everyone can still afford to take some time off to enjoy the festive season…surely there will be no further rate rises in the near future.
A happy Christmas to all and trust you have a fabulous 2011.Cheers
Garry
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