Monday, November 1, 2010
No rate rise here...
RBA September credit aggregates are out and the results are sluggish in their terms.
Credit growth is still a mix of moderate consumer strength and business weakness. Owner-occupier mortgages were up 7% annualised and investors 7.8% for total mortgage credit growth of 7.3%.
This blogger has noted before that, owing to the vast distortions in asset prices, such levels of credit growth are consistent with flat and some falling prices. Other personal loans leapt 15% annualised in the month to levels last seen in 2007. However this follows only 5% growth for the preceding twelve months.
Business continues to deleverage, whether by choice or force, down another 13% annualised on the month and is now down 11% from its 2008 high.
There is little in these figures to suggest an imminent interest rate rise.
Indeed, this blogger tips his hat to fellow blogger CK Murray who, in a comment on last month's rate speculation noted that the RBA is engaged in heavy "open-mouth operations". That is, talking down the market without actually raising rates, which sounds about right.
This blogger argued much the same at Business Spectator earlier this year but forgot all about it. The global economy is a lot to take in and sometimes the mind is a bit like "Ten in the bed"...
This blogger finds it hard to believe the banks will act unilaterally either in the increasingly hostile environment. Which just goes to show, despite the damning verdict of just about everyone, Joe Hockey is going to win some serious popular support.