Oliver’s Insights – Should the RBA raise rates to prepare households for higher global rates?

Oliver’s Insights – Should the RBA raise rates to prepare households for higher global rates?

The key points are as follows:

  • The RBA should avoid calls to raise interest rates prematurely just to prepare households for higher global rates.  Such a move would be Iike shooting yourself in the foot in order to practice going to the hospital.
  • Nor should the RBA mess with the inflation target that has served Australia well.
  • We don’t see it doing either and continue to see interest rates on hold out to 2020 at least and can’t rule out the next move in rates being a cut.
  • This will mean term deposit rates will stay low, search for yield activity will still help yield sensitive unlisted investments (albeit it’s waning) and an on-hold RBA with a tightening Fed is likely to mean ongoing downward pressure on the Australian dollar.

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