This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.theguardian.com/australia-news/live/2015/nov/03/reserve-bank-interest-rate-decision-live-updates
The article has changed 8 times. There is an RSS feed of changes available.
| Version 6 | Version 7 |
|---|---|
| Reserve Bank of Australia keeps cash rate at 2% – as it happened | Reserve Bank of Australia keeps cash rate at 2% – as it happened |
| (about 1 month later) | |
| 4.39am GMT | 4.39am GMT |
| 04:39 | 04:39 |
| Ok. That’s it from me as well. Thanks for reading. | Ok. That’s it from me as well. Thanks for reading. |
| There is now a news story on this afternoon’s decision here which I will update with reaction. | There is now a news story on this afternoon’s decision here which I will update with reaction. |
| 4.18am GMT | 4.18am GMT |
| 04:18 | 04:18 |
| Well, fancy that. | Well, fancy that. |
| The Cup winner Prince Of Penzance was the same price as the RBA increasing the cash rate by more than 0.25%, namely $100. | The Cup winner Prince Of Penzance was the same price as the RBA increasing the cash rate by more than 0.25%, namely $100. |
| 4.02am GMT | 4.02am GMT |
| 04:02 | 04:02 |
| SUMMARY | SUMMARY |
| 3.58am GMT | 3.58am GMT |
| 03:58 | 03:58 |
| The markets (2) | The markets (2) |
| The ASX/S&P200 is more or less back to where it was when we started out. | The ASX/S&P200 is more or less back to where it was when we started out. |
| After a sharp fall just after the announcement (no cut=no cheap money), it bounced back up when traders digested the fine print where Glenn Stevens gave himself room for a cut in coming months. | After a sharp fall just after the announcement (no cut=no cheap money), it bounced back up when traders digested the fine print where Glenn Stevens gave himself room for a cut in coming months. |
| 3.53am GMT | 3.53am GMT |
| 03:53 | 03:53 |
| And so it would seem the RBA is slightly more happy about our economy than it was a month ago. And yet just to keep us all guessing it seems more willing than a month ago to lower rates if need be. | And so it would seem the RBA is slightly more happy about our economy than it was a month ago. And yet just to keep us all guessing it seems more willing than a month ago to lower rates if need be. |
| What that would suggest is that should the US Fed not lower rates, and should any economic data take a downward turn, the RBA might just be willing to cut rates at least one more time. | What that would suggest is that should the US Fed not lower rates, and should any economic data take a downward turn, the RBA might just be willing to cut rates at least one more time. |
| But all things being equal, it would seem they’re happy with them where they are. | But all things being equal, it would seem they’re happy with them where they are. |
| And with that we turn our attention to the Melbourne Cup live blog with Russell Jackson here. | And with that we turn our attention to the Melbourne Cup live blog with Russell Jackson here. |
| For what it is worth, my tips are Trip to Paris, Bondi Beach and Red Cadeaux. Good luck and thanks for reading! | For what it is worth, my tips are Trip to Paris, Bondi Beach and Red Cadeaux. Good luck and thanks for reading! |
| 3.50am GMT | 3.50am GMT |
| 03:50 | 03:50 |
| 3.47am GMT | 3.47am GMT |
| 03:47 | 03:47 |
| Looking at the statement it would seem the RBA is becoming less worried about housing prices. | Looking at the statement it would seem the RBA is becoming less worried about housing prices. |
| In October it said that “prices continue to rise strongly in Sydney and Melbourne”. Today they dropped the “strongly” adjective to make it: | In October it said that “prices continue to rise strongly in Sydney and Melbourne”. Today they dropped the “strongly” adjective to make it: |
| Dwelling prices continue to rise in Melbourne and Sydney, though the pace of growth has moderated of late. | Dwelling prices continue to rise in Melbourne and Sydney, though the pace of growth has moderated of late. |
| It remains unconcerned about the value of the dollar, with no change in the wording regarding its value. | It remains unconcerned about the value of the dollar, with no change in the wording regarding its value. |
| 3.46am GMT | 3.46am GMT |
| 03:46 | 03:46 |
| Dollar up and down | Dollar up and down |
| Traders not quite sure where it’s going after that statement. | Traders not quite sure where it’s going after that statement. |
| Updated | Updated |
| at 3.46am GMT | at 3.46am GMT |
| 3.43am GMT | 3.43am GMT |
| 03:43 | 03:43 |
| Ok. Back to Greg, who’s been reading the statement more carefully than me. | Ok. Back to Greg, who’s been reading the statement more carefully than me. |
| As Martin and Stephen Koukoulas noted, the big change in the statement is the final paragraph. | As Martin and Stephen Koukoulas noted, the big change in the statement is the final paragraph. |
| Last month the RBA finished by saying: “The Board today judged that leaving the cash rate unchanged was appropriate at this meeting. Further information on economic and financial conditions to be received over the period ahead will inform the Board’s ongoing assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target.” | Last month the RBA finished by saying: “The Board today judged that leaving the cash rate unchanged was appropriate at this meeting. Further information on economic and financial conditions to be received over the period ahead will inform the Board’s ongoing assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target.” |
| All pretty dull. | All pretty dull. |
| But today the wording was changed to read: | But today the wording was changed to read: |
| At today’s meeting the Board judged that the prospects for an improvement in economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate at this meeting. | At today’s meeting the Board judged that the prospects for an improvement in economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate at this meeting. |
| Now this would suggest an end to rate cuts. But the very next line provides a suggestion that more cuts could be on the way: | Now this would suggest an end to rate cuts. But the very next line provides a suggestion that more cuts could be on the way: |
| Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand. | Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand. |
| No wonder the value of the dollar went up and down half a cent in the minute after the announcement. Poor currency traders. | No wonder the value of the dollar went up and down half a cent in the minute after the announcement. Poor currency traders. |
| 3.39am GMT | 3.39am GMT |
| 03:39 | 03:39 |
| But it does add: | But it does add: |
| Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand. | Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand. |
| So it’s a bit of the usual “on the one hand” type stuff. | So it’s a bit of the usual “on the one hand” type stuff. |
| 3.37am GMT | 3.37am GMT |
| 03:37 | 03:37 |
| The RBA's statement | The RBA's statement |
| Read the full statement from RBA governor Glenn Stevens here. | Read the full statement from RBA governor Glenn Stevens here. |
| But the highlight is probably this phrase: | But the highlight is probably this phrase: |
| At today’s meeting the Board judged that prospects for an improvement in economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate at this meeting. | At today’s meeting the Board judged that prospects for an improvement in economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate at this meeting. |
| 3.33am GMT | 3.33am GMT |
| 03:33 | 03:33 |
| Could the Melbourne Cup be as exciting? | Could the Melbourne Cup be as exciting? |
| 3.30am GMT | 3.30am GMT |
| 03:30 | 03:30 |
| IT'S A HOLD!!! | IT'S A HOLD!!! |
| CASH RATE STAYS AT 2%. | CASH RATE STAYS AT 2%. |
| 3.26am GMT | 3.26am GMT |
| 03:26 | 03:26 |
| And lastly as ever he value of the dollar hovers over the decision. Currently the dollar is trading at around US71.71c, a bit higher than it has been of late but still well below where it has been for the past 18 months: | And lastly as ever he value of the dollar hovers over the decision. Currently the dollar is trading at around US71.71c, a bit higher than it has been of late but still well below where it has been for the past 18 months: |
| The US Federal Reserve is expected to finally raise its interest rates in the coming months – possibly in December. That will see the value of the US dollar strengthen some more (much of it is already priced in) and the value of our dollar fall. | The US Federal Reserve is expected to finally raise its interest rates in the coming months – possibly in December. That will see the value of the US dollar strengthen some more (much of it is already priced in) and the value of our dollar fall. |
| Largely this means the movement of our dollar is out of our hands. Were the RBA to cut today it certainly would see the value fall, but staying put would not set off a rise in the manner that it did back in 2012-13 whenever the RBA did nothing. | Largely this means the movement of our dollar is out of our hands. Were the RBA to cut today it certainly would see the value fall, but staying put would not set off a rise in the manner that it did back in 2012-13 whenever the RBA did nothing. |
| No one is thinking a rate rise for us in on the cards any time soon. And the RBA may believe that it does not need to cut rates to get the dollar down because the Fed will do its work for it. | No one is thinking a rate rise for us in on the cards any time soon. And the RBA may believe that it does not need to cut rates to get the dollar down because the Fed will do its work for it. |
| We shall see, and we shall also see in a few minutes if the governor’s statement has anything new to say that may indicate what it is thinks of the economy and what the RBA can do – if anything – about it. | We shall see, and we shall also see in a few minutes if the governor’s statement has anything new to say that may indicate what it is thinks of the economy and what the RBA can do – if anything – about it. |
| 3.23am GMT | 3.23am GMT |
| 03:23 | 03:23 |
| One factor that will be in the RBAs thinking is the moves of the big four banks to raise rate independently over the past month. The moves (as I wrote about here) were in response to new measures brought in by the financial regulator Apra. | One factor that will be in the RBAs thinking is the moves of the big four banks to raise rate independently over the past month. The moves (as I wrote about here) were in response to new measures brought in by the financial regulator Apra. |
| The regulation meant banks had to raise rates if they wanted to maintain their level of profitability. | The regulation meant banks had to raise rates if they wanted to maintain their level of profitability. |
| Largely this is what Apra wanted to happen – part of the reason for the regulations was to try to remove speculative and risky lending. Higher interest rates deter this to an extent. They also mean the RBA can cut rats or keep rates lower for longer and have less concerns about setting off a bout of risky borrowing. | Largely this is what Apra wanted to happen – part of the reason for the regulations was to try to remove speculative and risky lending. Higher interest rates deter this to an extent. They also mean the RBA can cut rats or keep rates lower for longer and have less concerns about setting off a bout of risky borrowing. |
| The regulation were first targeted at investment lending and as a result the banks first increased their mortgage rates for investment loans. This has seen a sharp fall in the growth of investment housing credit: | The regulation were first targeted at investment lending and as a result the banks first increased their mortgage rates for investment loans. This has seen a sharp fall in the growth of investment housing credit: |
| The RBA would not be displeased with this, but it may be concerned that the new mortgage rate rises will have the same impact on owner-occupiers – a group the RBA is less worried about. | The RBA would not be displeased with this, but it may be concerned that the new mortgage rate rises will have the same impact on owner-occupiers – a group the RBA is less worried about. |
| A rate cut today would counteract the rate rises of the Big 4 banks, but likewise the RBA may decide to wait and see, given the impact of the rate rises by the banks has yet to actually be felt by home owners. | A rate cut today would counteract the rate rises of the Big 4 banks, but likewise the RBA may decide to wait and see, given the impact of the rate rises by the banks has yet to actually be felt by home owners. |
| 3.18am GMT | 3.18am GMT |
| 03:18 | 03:18 |
| But what is going to increase demand? Today the RBA released its latest index of commodity prices and just in case you have been asleep since 2012, it reminded us all that the mining boom is done: | But what is going to increase demand? Today the RBA released its latest index of commodity prices and just in case you have been asleep since 2012, it reminded us all that the mining boom is done: |
| The index is now at a level not seen since June 2006 (and incidentally the graph really shows how odd was the time from 2005-2011). So don’t expect any great influx of investment from out west. At least we can keep exporting our commodities to China … | The index is now at a level not seen since June 2006 (and incidentally the graph really shows how odd was the time from 2005-2011). So don’t expect any great influx of investment from out west. At least we can keep exporting our commodities to China … |
| But here the news isn’t flash either. Yesterday the latest purchasing managers index from China showed things are pretty ordinary over there as well. It found that the PMI, which gives a snapshot of operating conditions in the manufacturing economy, was 48.3 in October. A figure below 50 means things are getting worse. The good news is this was an improvement from the 47.2 in September. | But here the news isn’t flash either. Yesterday the latest purchasing managers index from China showed things are pretty ordinary over there as well. It found that the PMI, which gives a snapshot of operating conditions in the manufacturing economy, was 48.3 in October. A figure below 50 means things are getting worse. The good news is this was an improvement from the 47.2 in September. |
| So if you like your glass half full, you can say that at least things aren’t as bad as they were. | So if you like your glass half full, you can say that at least things aren’t as bad as they were. |
| 3.15am GMT | 3.15am GMT |
| 03:15 | 03:15 |
| The other big question though is why would the RBA want to get people taking out more loans to build more houses. Yes construction is a life blood of our economy – and the housing sector is a vital part – but have you seen how much debt we’re in at the moment? | The other big question though is why would the RBA want to get people taking out more loans to build more houses. Yes construction is a life blood of our economy – and the housing sector is a vital part – but have you seen how much debt we’re in at the moment? |
| The RBA recently revised its calculations for the level of household debt to disposable income. The good news was that it lowered its estimate of total debt, the bad news is its calculations show the levels of debt are rising faster than was previously though. | The RBA recently revised its calculations for the level of household debt to disposable income. The good news was that it lowered its estimate of total debt, the bad news is its calculations show the levels of debt are rising faster than was previously though. |
| In June this year the ratio of housing debt to disposable income was 132.8, compared to 119.2 when the RBA began cutting rates in November 2011. | In June this year the ratio of housing debt to disposable income was 132.8, compared to 119.2 when the RBA began cutting rates in November 2011. |
| The rise in the ratio of household debt over the past 3 years is now getting close to the levels seen during the housing boom of the early 2000s. The difference is back then the ratio of housing debt to income was in the 90s | The rise in the ratio of household debt over the past 3 years is now getting close to the levels seen during the housing boom of the early 2000s. The difference is back then the ratio of housing debt to income was in the 90s |
| Cutting rates lifts asset prices, and is supposed to generate income and inflation growth. Alas central banks around the world have seen it raise asset prices, see inflation stay flat and debt levels increase. | Cutting rates lifts asset prices, and is supposed to generate income and inflation growth. Alas central banks around the world have seen it raise asset prices, see inflation stay flat and debt levels increase. |
| Australia already has some of the highest debt to income ratios in the world, does the RBA really want them to increase, if lowering rates yet again will likely do little to improve overall demand in the economy? | Australia already has some of the highest debt to income ratios in the world, does the RBA really want them to increase, if lowering rates yet again will likely do little to improve overall demand in the economy? |
| 3.09am GMT | 3.09am GMT |
| 03:09 | 03:09 |
| The drop off in dwelling approvals is broadly the same across the nation – but Victoria stands out as being one of the more severe: | The drop off in dwelling approvals is broadly the same across the nation – but Victoria stands out as being one of the more severe: |
| While things are going backwards in WA due to the end of the mining boom, oddly, in Victoria there has been such a drop in building approvals that it has gone from an annual growth of 31.1% in February this year to now just 0.6%. | While things are going backwards in WA due to the end of the mining boom, oddly, in Victoria there has been such a drop in building approvals that it has gone from an annual growth of 31.1% in February this year to now just 0.6%. |
| And the big reason is the end of the apartment building boom. In February – when the RBA cut rates, non-housing approvals in Victoria were growing at an annual rate of 64.3%. Seven months later and the annual growth in September showed a fall of 5.1%. | And the big reason is the end of the apartment building boom. In February – when the RBA cut rates, non-housing approvals in Victoria were growing at an annual rate of 64.3%. Seven months later and the annual growth in September showed a fall of 5.1%. |
| Does the RBA see that and think, well that’s just a sign that this period of rates has done all it can and it is time to let things wash out, or do they think the fall is too quick, and another rate cut is needed to get people building? | Does the RBA see that and think, well that’s just a sign that this period of rates has done all it can and it is time to let things wash out, or do they think the fall is too quick, and another rate cut is needed to get people building? |