Debt cost spike presents a few challenges for RBA
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Government interest costs are on track to blow out by $15 billion over the next two years because of a sudden jump in bond yields, putting pressure on the Reserve Bank of Australia to consider more aggressive interventions in bond markets to suppress borrowing costs.
Rising economic optimism – stoked by the vaccine rollouts, easing health restrictions, high commodity prices and a planned $US1.9 trillion ($2.47 trillion) stimulus by US President Joe Biden – has fuelled a jump in borrowing costs around the world, particularly in Australia and New Zealand.
Investors are betting big against Philip Lowe’s expectation that the cash rate will remain anchored at 0.1 per cent until at least 2024.
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Letâs start with some salutary stories and then consider how 2021 is unfolding relative to our
a priori expectations.
The first tale is not a happy one. A colleague who works with me, Gary Walsh, was driving through the rain on his daily commute from Wollongong the other day. As he was traversing the s-bends outside the Gong, his car hit some residual oil on the road which, combined with the torrential rain, sent him aquaplaning across the freeway.
Unfortunately the vehicle careened into a concrete pylon, which then flipped it on to its side, following which it spun back on to the freeway. Thankfully all the airbags burst into action and Gary, a robust former first-grade rugby league player, was relatively unscathed. But he was trapped inside the vehicle, bleeding and unable to open his door.
Economists for the nation’s biggest mortgage lender believe house prices in Sydney and Melbourne will rise by at least 12 per cent over the next two years.
As part of its post-Brexit global vision, Britain is hosting a UK-Africa trade conference. But its new trade deals fail to offer African nations much extra as Britain falls behind as a trading partner on the continent.