| Effective Date | Change in cash rate Percentage points | New cash rate target Per cent | |
|---|---|---|---|
| 7 Dec 2011 | -0.25 | 4.25 | |
| 2 Nov 2011 | -0.25 | 4.50 | |
| 3 Nov 2010 | +0.25 | 4.75 | |
| 5 May 2010 | +0.25 | 4.50 | |
| 7 Apr 2010 | +0.25 | 4.25 | |
| 3 Mar 2010 | +0.25 | 4.00 | |
| 2 Dec 2009 | +0.25 | 3.75 | |
| 4 Nov 2009 | +0.25 | 3.50 | |
| 7 Oct 2009 | +0.25 | 3.25 | |
| 8 Apr 2009 | -0.25 | 3.00 | |
| 4 Feb 2009 | -1.00 | 3.25 | |
| 3 Dec 2008 | -1.00 | 4.25 | |
| 5 Nov 2008 | -0.75 | 5.25 | |
| 8 Oct 2008 | -1.00 | 6.00 | |
| 3 Sep 2008 | -0.25 | 7.00 | |
| Effective Date | Change in OCR Percentage points | New OCR Per cent | |
|---|---|---|---|
| 10 Mar 2011 | -0.50 | 2.50 | |
| 29 Jul 2010 | +0.25 | 3.00 | |
| 10 Jun 2010 | +0.25 | 2.75 | |
| 30 Apr 2009 | -0.50 | 2.50 | |
| 12 Mar 2009 | -0.50 | 3.00 | |
| 29 Jan 2009 | -1.50 | 3.50 | |
| 4 Dec 2008 | -1.50 | 5.00 | |
| 23 Oct 2008 | -1.00 | 6.50 | |
| 11 Sep 2008 | -0.50 | 7.50 | |
It has been some time since my brother and I started our AUD & NZD fixed deposits, more specifically we are just one quarter short of 3 years.
From the list, we can see some of the big companies in China right now. Personally, I am most interested in Baidu. Firstly, it has the highest 6-month daily turnover in the list, reflecting a high level of liquidity. Secondly, with the exit of Google from China, this opens up an opportunity for other search providers such as Baidu. Thirdly, the China growth story is arguably the current flavour of the times, and Baidu is well-placed to ride on this.Reserve Bank Governor Alan Bollard said: “While the outlook for economic growth has softened somewhat, it is still appropriate to continue to reduce the extraordinary level of support implemented during the 2008/09 recession.
“The world economy continues its fragile recovery. Trading partner growth has turned out stronger than we predicted, however, future prospects for growth have deteriorated. While still at high levels, our commodity prices have moderated.
“In New Zealand, domestic demand is subdued. Households are cautious, with retail spending growing only modestly, housing turnover in decline and household credit growth weak. While this caution has been evident for some time, the recent slowing in net immigration will act to further dampen consumer spending. Business investment remains very low, with corporate lending continuing to be subdued.
“The New Zealand dollar has appreciated in recent weeks. This appreciation is inconsistent with the softening in New Zealand’s economic outlook and moderation in our export commodity prices.
“Overall, we continue to predict respectable near-term GDP growth, with manufacturing confidence remaining elevated and forestry exports continuing to expand. An eventual recovery in business investment will assist growth over the medium term.
“Annual CPI inflation has been near 2 percent for the past five quarters. As the economy grows, inflationary pressures are expected to pick up.
“Given this, some further removal of monetary policy stimulus is appropriate at this stage. Even after today’s move, the level of the OCR is still very supportive of economic activity. The pace and extent of further OCR increases is likely to be more moderate than was projected in the June Statement. Our policy assessment will be continually reviewed in light of economic and financial market developments.
“The coming increase in the rate of GST and other government-related price changes are likely to temporarily push annual CPI inflation above 3 percent. The Bank does not expect this price spike to have a lasting impact on inflation. However, the price and wage setting behaviour of firms and households will be monitored for evidence of any increase in inflation expectations.”
At its meeting today, the Board decided to leave the cash rate unchanged at 4.5 per cent.
The global economy has continued to expand over recent months, consistent with a trend pace of growth. The expansion remains uneven, with the major advanced countries recording only modest growth overall, but growth in Asia and Latin America, to date, very strong. There are indications that growth in China is now starting to moderate to a more sustainable rate. In Europe, while output in some key countries has been improving recently, prospects for next year are more uncertain given the budgetary constraints governments face and the pressure on euro area banks. US growth has looked stronger in the first half of 2010 but the pace of labour market improvement is slow.
Caution in financial markets has been evident in the past couple of months, driven principally by concerns about European sovereigns and banks but also by some uncertainty about the pace of future global growth. Financial prices have been more volatile and equity prices and government bond yields in major countries have declined. Some tightness in funding markets is evident, though not on the scale seen in late 2008. Commodity prices are off their peaks but those most important for Australia remain at very high levels, and the terms of trade are approaching their peak of two years ago.
With the high level of the terms of trade expected to add to incomes and demand, output growth in Australia over the year ahead is likely to be about trend, even though the effects of earlier expansionary policy measures will be diminishing. Consumption spending is recording a modest increase at present, with households displaying a degree of caution, but most indicators suggest business investment will increase over the coming year. Business credit appears to have stabilised, though credit conditions for some sectors remain difficult. Credit outstanding for housing has continued to expand at a solid pace, but dwelling prices are rising more slowly than earlier in the year.
The labour market has continued to firm gradually, and after the significant decline last year, growth in wages has picked up a little, as had been expected. Underlying inflation appears likely to be in the upper half of the target zone over the next year. The rate of CPI increase is likely to be a little above 3 per cent in the near term, due to the effects of increases in tobacco taxes announced earlier in the year and significant increases in prices for utilities.
The current setting of monetary policy is resulting in interest rates to borrowers around their average levels of the past decade. Pending further information about international and local conditions for demand and prices, the Board views this setting of monetary policy as appropriate.
WELLINGTON - NEW Zealand's central bank lifted the official interest rate by a quarter percentage point Thursday from a record low of 2.5 per cent, the first change since April last year.
Reserve Bank of New Zealand Governor Alan Bollard said the official cash rate was being raised to 2.75 per cent because the economy was entering its second year of recovery and inflationary pressures were expected to be contained.
'Given this outlook and as previously signalled, we have decided to begin removing some of the monetary policy stimulus that is currently in place,' Mr Bollard said.
'The further removal of stimulus will be reviewed in light of economic and financial market developments.'
New Zealand slumped into recession at the start of 2008, emerging only in the second quarter of last year with economic growth picking up to 0.8 per cent in the three months to December compared with the previous quarter. -- AFP
Looks like AUD rates will be staying at current levels for the moment...
SYDNEY - AUSTRALIA paused an aggressive series of interest rate rises on Tuesday, citing turmoil on global markets over Europe's debt woes which have raised the spectre of a 'double dip' recession.
The Reserve Bank of Australia opted to leave rates on hold at 4.50 per cent, deciding against a fourth straight quarter-point hike and the seventh since October.
'Interest rates to borrowers are around their average levels of the past decade, which is a significant adjustment from the very expansionary settings reached a year ago,' said Reserve Bank of Australia governor Glenn Stevens.
'Taking all the available information into account, the Board views this setting of monetary policy as appropriate for the near term,' he added. Australia's stock market and national currency have fallen sharply over the past month as investors were rattled by debt problems in Greece, Spain and elsewhere which have prompted emergency action by European leaders.
The economy has also been overshadowed by a row over a new tax on the key resources sector, which has helped drive Australia's strong recovery from the financial crisis.
The rates decision followed mixed data on Tuesday, with April retail sales up a better-than-expected 0.6 per cent from a month earlier but housing building approvals down 14.8 per cent. -- AFP
Reserve Bank of Australia (RBA) media release statement on monetary policy decision found below:
At its meeting today, the Board decided to raise the cash rate by 25 basis points to 4.5 per cent, effective 5 May 2010.Recently, forecasts for world GDP growth have been revised up again, and growth is expected to be at trend pace or a little above in 2010. Conditions in Europe remain quite weak, though recent data suggest growth is becoming more established in North America. In Asia, where financial sectors are not impaired, growth has continued to be strong, contributing to pressure on prices for raw materials. The authorities in several countries outside the major industrial economies have now started to reduce the degree of stimulus to their economies.
Global financial markets are functioning much better than they were a year ago, but sovereign risk concerns have escalated significantly in Europe over recent weeks. This has prompted additional efforts by policymakers to put fiscal policies onto a sounder footing and to provide support for Greece in the near term. To date, there has been very little contagion outside Europe.
Australia’s terms of trade are rising by more than earlier expected, and this year will probably regain the peak seen in 2008. This will add to incomes and foster a build-up in investment in the resources sector. Under these conditions, output growth over the year ahead is likely to exceed that seen last year, even though the effects of earlier expansionary policy measures will be diminishing. The process of business sector deleveraging is moderating, with business credit stabilising and indications that lenders are starting to become more willing to lend to some borrowers, though credit conditions for some sectors remain difficult. Credit outstanding for housing has been expanding at a solid pace. New loan approvals for housing have moderated over recent months as interest rates have risen and the impact of large grants to first-home buyers has tailed off. Nonetheless, at this point the market for established dwellings is still characterised by considerable buoyancy, with prices continuing to increase over recent months.
Recent data on inflation confirm that it has declined from its peak in 2008, helped by a noticeable slowing in private-sector labour costs during 2009, the rise in the exchange rate and the earlier period of slower growth in demand. In both underlying and CPI terms, inflation over the most recent 12 months was around 3 per cent. Nonetheless, the extent of decline from here may not be quite as much as earlier forecast and inflation now appears likely to be in the upper half of the target zone over the coming year.
With the risk of serious economic contraction in Australia having passed some time ago, the Board has been adjusting the cash rate towards levels that would be consistent with interest rates to borrowers being close to the average experience over the past decade or more. The Board expects that, as a result of today’s decision, rates for most borrowers will be around average levels. This represents a significant adjustment from the very expansionary settings reached a year ago.
The Board will continue to assess prospects for demand and inflation, and set monetary policy as needed to achieve an average inflation rate of 2–3 per cent over time.
AUD and NZD are traditionally high-yielding currencies. Historically, foreign currencies also tend to trade within a band. Therefore, when it was reported in the news that the AUD was at a historical low, my brother and I felt it was a safe bet to park our non-emergency money there and just let it grow. Even if the exchange rate doesn't appreciate in our favour, we would still have the high interest to fall back on, not forgetting the power of compounding. However, our plan turned out to be not as foolproof as we thought and we were hit by the interest rate cuts, although Australia has started to restore them back to historical levels (see below).
SYDNEY - AUSTRALIA announced its fifth rate hike since October on Tuesday and said borrowing costs would continue to rise as growth and inflation return to normal after the global crisis.
The Reserve Bank of Australia (RBA) lifted the official cash rate 25 basis points to 4.25 per cent, underlining confidence that the country has seen off the downturn unscathed and must now work to moderate prices.
'The board judges that with growth likely to be around trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average,' RBA governor Glenn Stevens said in a statement.
Australia was the first developed economy to lift rates after the world's biggest financial shock since the Great Depression, raising them 25 basis points to 3.25 per cent in October and a further four times since.
The Reserve Bank is now unwinding its emergency cuts of late 2008 and 2009, when interest rates were slashed by 425 basis points to a five-decade low of 3.00 per cent as the world economy tanked.
'Australia's terms of trade are rising, adding to incomes and fostering a build-up in investment in the resources sector,' Mr Stevens said. 'The rate of unemployment appears to have peaked at a much lower level than earlier expected. 'The process of business sector de-leveraging is moderating, with ... indications that lenders are starting to become more willing to lend to some borrowers.' -- AFP
Disclaimer: Rates plotted are for 3-mth fixed deposits with OCBC, and not RBA nor RBNZ rates
