Negative interest rates?

Discussion in 'Markets & Economies' started by stackmans, Mar 19, 2020.

  1. stackmans

    stackmans Member

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    What are the chances the RBA will go negative?

    They have said consistently that they would never go negative however they also said just 34 days ago that the would never use QE in Australia and now what?

    I'm not interested in discussing the pros and cons of negative rates just the likelihood that it will happen in Australia.


    My 2c is that its likely. Thoughts?
     
  2. JulieW

    JulieW Well-Known Member Silver Stacker

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    They'll not go negative. It's a theoretical position and the RBA is way too conservative to experiment.
     
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  3. Ag bullet

    Ag bullet Well-Known Member

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    well the RBA just cut the cash rate to .25% so it's getting closer to negative rates.
     
  4. leo25

    leo25 Well-Known Member Silver Stacker

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    Where did they say they will never do QE? I've listened to many talks (some 5 months old) where Philip Lowe openly talks about doing QE.

    Also technically there is no need to go negative. It's arbitrary if they do or don't. My guess is they won't, as it's easier and more effective to just do QE.
     
    Last edited: Mar 19, 2020
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  5. leo25

    leo25 Well-Known Member Silver Stacker

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  6. Silver260

    Silver260 Well-Known Member Silver Stacker

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    This, plus the next step will be Fiscal. Central Banks have been saying for time that Fiscal policy/stimulus will be required during the next downturn.
     
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  7. aelmsu

    aelmsu Member

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    I have read that the RBA has said the lowest it will take interest rates is 0.25%.
     
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  8. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Banks raising savings rates. So much for going into negative territory.
     
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  9. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Last minutes of the RBA meeting: confirmation in their mind that their chosen accommodative monetary policy measures (along with fiscal) are working to help reduce the fallout from the declining economic circumstances AND that they will continue to be required.

    RBA made it clear that they are willing to purchase government bonds if the yield drops below their forecasted target.

    So forward guidance remains on the agenda as Lowe has long maintained, purchasing government bonds remains on the agenda as Lowe has long maintained, public comments around fiscal policy remain on the agenda as Lowe has long maintained, negative rates are not on the agenda as Lowe has long maintained, purchasing corporate bonds are not on the agenda as Lowe has long maintained and a further interest rate cut is not on the agenda as Lowe has long maintained.

    It's all going to plan as I see it.

    https://rba.gov.au/monetary-policy/rba-board-minutes/2020/2020-06-02.html
     
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  10. KangaBanga

    KangaBanga Member

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    Negative rates this year for sure. Plus QE, plus infrastructure stimulus, and its all not going to work, we will still go into a prolonged multiyear recessionary environment.

    Record unemployment -> now record vacancy rates -> property crash -> banks credit crunch/crash -> recession/depression.

    If melbournes covid situation gets worse and spreads to sydney we will see the economy tank even more.
     
  11. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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  12. Oddjob

    Oddjob Well-Known Member Silver Stacker

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