What a difference a week can make. Just days ago, there were growing calls for the RBA to hike rates once more. Now that's effectively off the table, financial markets are in a mad panic that rate cuts won't come soon enough.
After salivating for months about the prospect of interest rate cuts and blithely ignoring reality, financial markets suddenly are in a mad panic about the fundamentals driving the push for cuts.
Why? Because investors were lulled into a false sense of security that as interest rates eased, markets would remain buoyant and few, if any, believed the economy would slow enough to tip into recession. And had Wall Street, which has been lurching wildly for weeks, performed its high-wire nosedive this Thursday instead of last week, we'd have found ourselves wildly out of step and in a world of pain.
After centuries of missteps, governments and, these days, central banks try to smooth out the cycles by slowing activity in booms and speeding it up during busts. As a result, it was late to the party when it came to rate hikes. Now, it seems, it could well mishandle the rate-cutting cycle. The second is that while they readily agree that further rate hikes will have little effect on curbing the services inflation driving our pricing structures, they argue for them anyway, primarily because they are "data dependent" and interest rates are all they have.
Reserve Bank Of Australia Michele Bullock Interest Rates Cash Rate Mortgage Inflation Cost Of Living Cpi Recession Bank Of England Jerome Powell Federal Reserve Economy Economic Downturn Financial Markets Asx Wall Street Rate Cuts Rate Hike Rate Hikes Rate Cut Finance
United Kingdom Latest News, United Kingdom Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Interest rates: If the RBA was doing its job, it would immediately lift ratesA hot inflation figure on Wednesday would show we are in the grip of a structurally persistent crisis which has been underestimated in three of the last four quarters.
Read more »
Interest rates: RBA to hold rates steady as inflation gets closer to targetThe central bank is expected to oversee a “straightforward” meeting this week, after last week’s inflation result took the heat out of tightening fears.
Read more »
Australia ‘not in any position to cut rates’ ahead of RBA callIndependent economist Warren Hogan has argued Australia is 'not in any position to cut rates' ahead of the Reserve Bank's meeting on Tuesday, although he backed predictions the bank would opt against another hike.
Read more »
RBA likely to hold rates as underlying inflation easesTrimmed mean inflation, the RBA’s preferred measure of underlying price pressures, eased to 3.9 per cent in June from 4 per cent in March.
Read more »
Inflation rises to 3.8% amid hopes the RBA will hold off hiking interest rates againAustralia’s consumer price index rose in the June quarter in line with economists’ forecasts
Read more »
Inflation shows signs of weakness, giving RBA pause for thoughtInflation in the June quarter edged marginally higher, rising one per cent over the period, giving households hope they may be spared a further rate hike next week.
Read more »