Saturday, February 11, 2012

Interest Rates - RBA asleep at the wheel?

The RBA must have struggled to put verbiage together this week in order to make their very important interest rate decision. Regurgitating views we already know: the usual waffle on Europe we've seen for months now in all the financial media; Food Prices are unwinding (Thanks to Coles supermarket - lucky they slapped together a discount advertising campaign otherwise the RBA minutes would be a sentence shorter), unemployment has risen; etc etc.

Is anyone awake at the RBA and looked out the window? The verbiage is wonderful, but a cursory glance at the 90 day bill rate shows that is has changed very little over the last few months. The 90 day rate is at 4.39% v's the RBA Cash rate target of  4.25%. The RBA "cash rate target" lag of the 90 day bill rate is on average 0.15%, and guess what - the RBA lag is 0.14% as of Thursday, almost bang on average.

Next month I'll get out of bed a little earlier and put up the updated charts of the 90 day v's the RBA cash rate target - and make a way out guess on what the decision will be.

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