Negative interest rates?

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

  1. stackmans

    stackmans Active 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 Active 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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  13. mmm....shiney!

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

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  14. BuggedOut

    BuggedOut Well-Known Member Silver Stacker

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    Not long now until we get the backflip eh shiney? :rolleyes:
     
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  15. leo25

    leo25 Well-Known Member Silver Stacker

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    I would love to know what he thinks negative rates means in reality. My guess is he has no clue, he probably thinks he is cool by saying “negative rates”.

    Also if negative rates ever did manifest, it will never make its way to the person on the street.
     
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  16. Cracka

    Cracka Member Silver Stacker

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    It would be a disaster for the man on the street! Negative rates and no job. It would almost destroy the self funded retirees dream and would only really work in a universal wage scenario for any meaningful time.
     
  17. BuggedOut

    BuggedOut Well-Known Member Silver Stacker

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    Is there even any doubt this is on the cards? It's straight outta the playbook here. We've got helicopter money already.
     
  18. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    Negative rates wont happen until we are all stuck with digital money.
    That way if you wont spend it, they will spend it for you.
    Just another way of destroying people and their finances.
    Those who control the money make the rules.
     
  19. Jason1

    Jason1 Well-Known Member

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    Tim Wilson and the RBA had a bit of a tiff over this subject last year, in public and in a senate inquiry.
    You are absolutely correct, QE was never off the table and was openly discussed as a probability, Negative interest rates were rejected. there are senate transcripts between the RBA and Tim Wilson to back up what you have stated.
    I had seen many other conversations at many business forums with the rba pushing QE and rejecting Negative interest rates. I Just used the senate one as Im sure it would be the easiest transcripts to find.
     
    Last edited: Aug 21, 2020
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  20. mmm....shiney!

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

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    Westpac Chief Economist on negative rates:

    snip

    https://stockhead.com.au/news/think-big-could-negative-interest-rates-become-a-reality-in-australia/

    *he rising value of the AUD and low growth rates.
     

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