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RBA hikes rates to 12-year high

Picture of Pete Wargent
Pete Wargent
Picture of Pete Wargent

Pete Wargent

Pete Wargent is one of Australia’s most highly respected financial and housing market analysts. He’s also a six-time personal finance and investing author, and writes one of Australia’s most followed finance blogs – petewargent.blogspot. Pete walks the talk when it comes to investing, and he gratefully parked his career in accountancy, having achieved financial independence at the age of 33, as detailed in his best-selling first book, Get a Financial Grip: a simple plan for financial freedom. Pete is uniquely positioned to comment on housing markets as the co-founder of an active property buyer’s agency in Brisbane, combined with his unparalleled ability to deliver powerful, data-driven market analysis. Pete also runs a personal wealth coaching business.
More analysis

12-year high

The Reserve Bank of Australia hiked the cash rate target from 4.10% to 4.35% today, taking the rate to a 12-year high.

Interestingly, the S&P/ASX 200 (INDEXASX: XJO) saw the modest shifts in language as reflective of a good deal of uncertainty about household cashflow stress and the need for any further policy tightening.

Perhaps most notably, there was a change in wording from ‘some’ to ‘whether’ further tightening is required.

That having been said, hikes often come in pairs or back to back – a bit like London buses – so we’ll have to see what the next month of data brings.

Australia’s 3-year bond yield is trading at around 4.18 per cent, which is a bit below where it was in early July, and more than 25 basis points lower than recent highs.

The Aussie dollar also fell back a little from 64.9 US cents this morning to 64.4 US cents after the release.

Although Westpac Banking Corp‘s (ASX: WBC) results release yesterday showed a relatively low rate of 30+ day mortgage arrears, as expected there has been a gradual increase in stressed exposures, and some lenders may offer discounts to households in severe mortgage stress.

 

One of Australia’s most highly respected financial and housing market analysts.

Pete is in demand as a public speaker and markets commentator, appearing at high-profile events including the flagship UBS European Conference in London.

Enquire today about Pete’s 1-to-1 coaching or property buying services.

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