Australia Raise Short Term Rates!

Discussion in 'Economics' started by reflexivetrader, Nov 4, 2003.

  1. Australia unexpectedly raises interest rates By Allen Wan
    TOKYO (CBS.MW) -- Australia became the first of the major Western economies to raise interest rates this year due to booming growth as the Reserve Bank of Australia unexpectedly increased the cash rate by a quarter point to 5 percent on Wednesday. The RBA cited several reasons for the move -- strong domestic demand, unexpected strength in the nonfarm economy, a firming labor market and most notably, a housing boom. "The housing market continues to be buoyant. The effect of the rise in house prices over recent years is likely to be expansionary for the economy in the period ahead, as higher wealth is accessed to support household spending," RBA governor Ian MacFarlane said in a statement. "In the short term, these developments are unlikely to make for significant problems on CPI inflation." A strong economy has been reflected in the Australian dollar, which rose as high as 71.16 on Wednesday, marking 6-year highs against the U.S. dollar. Australia's All Ordinaries Index slid 1 percent to 3,246.

    Looks like 2004 could be similar to 1994, in that the Federal Reserve of the United States will have to start raising short term interest rates! The short term pain associated with rising rates will be felt by the equity markets World wide. However, just as then, sometime in 2004, great opportunities will occur on the short and then on the long side!

    Good Luck to All.
  2. A good news, a hope.
  3. Trajan


    Pretty soon the market is going to go back to the old "good news is bad and bad news is good" thinking.
  4. PKJR


    I thought we are already there - good GDP - market does not react and retraces


    Tear apart the GDP number and it wasn't all that great.
  6. Trajan


    I thought we were too, but it didn't really sell off and then yesterday.
  7. Unexpectedly? :confused: :D
  8. range


    None of the economists that Bloomberg surveyed were expecting Australia to raise rates at the recent meeting (a number were expecting a move in December).

    The Bank of England just raised its benchmark rate, as 42 of 45 economists surveyed by Bloomberg expected.

    The beginning of a new rate trend?
  9. I think the Fed will start raising interest rates in the second quarter of "04" for the US. I think in April or May we will be ripe for 1/4 pt increase at a minimum. We shall see... :)
  10. maxpi


    Countries with immigration have been doing well recently, notably Australia and right behind them is the USA. Both have the housing boom, low interest rates, etc., apparently Australia's boom is seen as beyond self sustaining and in fact in danger of a runaway so they upped the ante for loans, the USA economy is in the self sustaining mode and our central bank will be raising rates at some point.

    #10     Nov 6, 2003