Australian Banks to Raise Rates Faster Than RBA, Currency to Benefit
It looks like the market down under will begin pricing-in the shift in policy stance by the Reserve Bank of Australia. Over the weekend The Sunday Telegraph revealed that the Big Four banks within the country will be hiking rates faster than that at which the RBA is raising them. That is, mortgage, credit card rates, etc will begin to rise as the central bank raises the costs of funds that the bank borrows. This could be very beneficial for the Australian Dollar. Not only will the overnight lending rate rise, but so will longer term 30-year mortgage ones. Global investors who are looking for attractive yield might shift more of their focus toward the country as a result. Let's not forget that as market rates rise, the government has to also take measures to attract investors toward their debt. Since all of these assets are priced in Australian Dollars, the currency will naturally rise in value versus that of low-yielding countries.
- Could the Reserve Bank of Australia Really Raise Interest Rates?
- Reserve Bank of Australia Considered a 50bp Rate Hike?!
- Canadian, Australian and New Zealand Dollars Rally, Will the Reserve Bank of Australia Need to Raise Rates?
- Australian Dollar May Simply Consolidate After RBA-Induced Rally
- Commodity Currencies in Focus Next Week