National Australia Bank have raised their variable mortgage rate by 17 bp
Follows WPAC hike of 20bp last week, and CBA yesterday (15bp)
These are 'out of cycle' rate hikes; that is, the RBA is not hiking (as if ...) but the major commercial banks here in Australia are. ANZ is the only one yet to hike. They will. The hikes are all to do with regulatory requirements.
kneejerk AUD lower ...
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There was a lot of confusion in the comments last week when I tried to explain the implication of the Westpac rate hike (last week it was only Westpac that had done so, now another 2 have followed). I've seen that the confusion persists ... so let me post again what I posted last week:
If other banks follow suit then the cost of mortgage payments go up
This will see, at the margin (I am using this term in an economics context, not in a margin of profit sense), a cut in household expenditure on other goods and services
The RBA have been warning about this for a long time now
Hence it is of concern to the RBA and, at the margin (again, using it in the context of understanding economics, not business profit margin) , increases the potential for a rate cut.
As I said, IMO it won't be in November, and it may be never happen
But it does increase the probability of a cut, and indeed, thats why market pricing for a potential cut has increased this morning already and the AUD has extended its fall
OK. I am still in 'no November RBA cut' camp. I just don't think these hikes are enough of a concern to the RBA; some have even said the RBA have been expecting banks to do these hikes. Regardless, there is enough improving news on the Oz economy to keep the RBA on hold in November, IMO.
