Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hi Team, I'm curious why you felt there was 'no reason to do so' in lifting rates this week? Given overseas comparisons of:
Hi Scott,
Obviously you make a fair point which in hindsight was 100% correct. The market was positioned 70-30 that they would hike so were were in the contrarian camp. When the market is mostly one way, risk/reward is often skewed more favourably to be on the other side.
Our view was/is that the economy is softening at a faster rate than the data is currently reflecting and this is arguably already being reflected by short dated bond yields, i.e. the local 3s are trading below where they were before the hike and indeed the new elevated Cash Rate – time will tell but we think this will prove to be an unwarranted hike by Michele Bullock et al.
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