Mike's Minute: Still more questions to answer for the Reserve Bank

The mail I'm getting got a bit more official yesterday with Fitch suggesting they think the Reserve Bank isn't done. 

A lot of people thought the Reserve Bank was done cutting because fill-in Governor Christian Hawkesby basically said as much last week. 

On the inference that it was over, swap rates on the wholesale market started going up. 

Why should you care? Because if you owe money to a bank a lot of their income to lend comes from the wholesale markets. 

If it goes up so does your interest rate, which is what has been happening since last Thursday. 

Now this is where we get into subtlety and nuance. 

Technically Hawkesby said the bank remains open to further action, so if you lined Hawkesby up in court he could defend himself. 

But as always in these matters it is the between the lines stuff, the nod and the wink stuff, that markets read. 

And they are reading an end and, as a result, the numbers are rising. 

Tied in, if another cut is coming as Fitch suggests, things are further complicated with our dollar, given places like Australia are doing the opposite. 

Their Reserve Bank is closer to hiking than cutting. That affects how the world sees our economy and our currency, at 87cents to the Australian dollar and at 43cents to the pound, looks anaemic. 

For good measure, Fitch seems downbeat about our recovery. They are calling 2% next year by way of GDP. They were saying 2.7%. 

This then brings in the Government. The Government, in election year, would like 2.7% over 2%. 

2% they'd be able to milk but 2.7% is home court advantage. 

If you want one more thing that kind of backs up the Fitch funk, Black Friday didn’t work. 

Spending was down on last year. Personally, I think that’s about it being a crock of you-know-what and it's more clickbait than it is bargains and people are over being ripped off. 

But that’s just me. 

So anyway, Hawkesby leaves with a trail of questions left behind as he heads to the beach. 

If you are one of the so-often quoted ones who are rolling out of one mortgage into another, these are still tricky times to try and get right and you want to hope Fitch has misread it. 

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Episode Transcript

Speaker 1 (00:00):
Now the mail I'm getting got a bit more official
yesterday with Fitch are suggesting they think the Reserve Bank
isn't done. A lot of people thought the Reserve Bank
was done cutting the cash rate. This is filling in. Well,
the filling Governor Hawksby basically said as much last week
now on the inference that it was over. What's happening
here as swap rates on the wholesale market have started

(00:20):
going up. Now why should you care about this? Well,
because if you owe money to a bank, a lot
of their income to lend comes from wholesale markets. It
goes up, so does your interest bill, which is what
has been happening since last Thursday. Now, this is where
we get into subtlety in nu Once. Technically, Hawksby said,
the bank remains open to further action. So if you
line Hawksby up in a court, you could defend himself.
But as always in these matters, it's the in between

(00:42):
the line, you know, it's the nod and the wink
stuff that the markets read, and they're reading an end
and as a result, the numbers are rising. Tied in
but sort of in a sight. If another cutter is coming,
as Fitch suggests, things are further complicated with our dollar
given places like Australia are doing the opposite. Of course,
their reserve bank is closer to hiking than cut. That
affects how the world sees our economy and our currency.

(01:03):
In at eighty seven Australian and forty three to the pound,
we look anemic. Fitch, for good measure, seems downbeat about
our recovery as well. They're calling two percent growth next year.
That's GDP two percent. They were saying two point seven.
Now this brings in the government. The government in election
year would like two point seven over two percent. Obviously
two percent they can work with, I guess, but two
point seven that would be a home court advantage, wouldn't it.

(01:24):
And if you want one more thing, that kind of
backs up the Fitch funk Black Friday, as Andrew told us,
didn't work. Spinning was down on last year. Personally, I
think that's about it being a crock of you know what,
and it's more clickbait these days than it is bargains
and people are basically over being ripped off. But that's
just me so anyway, hawksby with a trail of questions
left behind as he heads off to the Beach. If

(01:45):
you were one of the so often quoted ones who
are rolling out of one mortgage into another, these still
seem to be some pretty tricky times to try and
get it right, and you want to hope that Fitch
basically is misread. For more from the Mic Asking Breakfast,
listen to News Talks at B from six am weekdays,
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