I discuss the fallout from the RBA rate hikes with Steve Mickenbecker from Canstar.
We look at strategies to alleviate the pain of higher rates, the risks within some approaches and the broader issues of negative equity and mortgage prisoners.
Steve Mickenbecker is in Canstar’s Group Executive Team, bringing more than 30 years of experience in the Australian financial services industry. As a financial commentator for Canstar, Steve enjoys sharing his expertise across topics such as home loans, superannuation, insurance, mortgages, banking, credit cards, investment, budgeting, money management and more.
The RBA released their latest Statement On Monetary Policy, which contained a higher forecast inflation rate, and a lower growth forecast, out beyond 2024. Their revisions to growth are down again, while rates would have to be higher for longer.
Compared with other Central Banks, the RBA is being too timid which will mean more pressure on households and businesses for longer.
The Bank of England raised interest rates by the most since 1989 on Thursday but warned investors that the risk of Britain’s longest recession in at least a century means borrowing costs are likely to rise less than they expect.
The BoE increased Bank Rate to 3% from 2.25% and warned that the British economy might not grow for another two years – the longest slump in records dating back to the 1920s – if rates were to go up by as much as markets have recently bet. The pound tumbled after the decision, while London-listed stocks fell and UK bonds came under pressure.
“We can’t make promises about future interest rates but based on where we stand today, we think Bank Rate will have to go up by less than currently priced in financial markets,” Governor Andrew Bailey said, in an unusually blunt message.
The BoE said it now expects inflation will hit a 40-year high of around 11% during the current quarter, more than five times its 2% target. But it also thinks the economy has entered a recession that could mean it contracts in both 2023 and 2024 and shrinks by 2.9% in total.
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Today’s post is brought to you by Ribbon Property Consultants
Following on the amazing news from last week that John Adams and In the Interests of the People, didn’t just get one inquiry into ASIC, but two – we have new news!
One inquiry will be held by the Senate Economics References Committee – this inquiry was established by a 43-20 vote of the Australian Senate.
Yesterday, 2 November 2022, the Senate Economics References Committee officially called for public submissions. The deadline submissions are 3 February 2023 – which is 3 months from now.
For all those people across Australia who have had significantly difficult experiences with ASIC, this is your opportunity to share your stories with the inquiry.
As Central Bank Rate Fest rolls on from the RBA on Tuesday, as expected the FED lifted the US interest rate target by 75 basis points overnight and reaffirmed continued hikes ahead. Later tonight we will get the Bank of England announcement, which is also expected to hike big.
The Fed’s unanimous decision lifted the target for the benchmark federal funds rate to a range of 3.75% to 4%, its highest level since 2008. “Slower for longer,” declared JP Morgan Chase & Co, chief US economist Michael Feroli in a note to clients. “The Fed opened the door to dialing down the size of the next hike but did so without easing up financial conditions.”
As a result, U.S. stocks ended sharply lower on Wednesday, with the S&P 500 suffering its worst rout on a Fed decision day since January 2021, as comments from Fed Chair Jerome Powell shattered initial optimism over a Fed policy statement that raised interest rates by 75 basis points but signaled that smaller rate hikes may be on the horizon.
The FED said its battle against inflation will require borrowing costs to rise further, yet signaled it may be nearing an inflection point in what has become the swiftest tightening of U.S. monetary policy in 40 years.
“It’s as if investors came to a haunted house and got candy, but once they unwrapped it, saw it was soggy broccoli,” said Max Gokhman, chief investment officer at AlphaTrAI.
The latest edition of our finance and property news digest with a distinctively Australian flavour.
Go to the Walk The World Universe at https://walktheworld.com.au/
Today we look at what the RBA says about recession risks, examine the US Bond market ahead of the Federal Reserve decision on rates tomorrow, the start of Bank of England QT and its implications, and the latest data from New Zealand which underscores the expectation that even higher interest rates are to be expected. All up, inflation is created a wide range of casualties!
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
I caught up with Peter Marshall from Mozo to look at how the latest RBA rate hikes are hitting the market, across mortgages, cards and savings. It is more important than ever to check your current rates, and seek out better ones!
Peter Marshall has been working in the Australian banking and finance industry for over 20 years and oversees Mozo’s extensive product database. He is regularly sought out for his expert commentary and analysis on banking and interest rates trends by print, radio and TV media.
Go to the Walk The World Universe at https://walktheworld.com.au/
Join me for a live discussion about the current state household finances, property and financial stress, based on our updated modelling to end October 2022. Our postcode engine will be online.
You can ask a question live.
Go to the Walk The World Universe at https://walktheworld.com.au/
