ICYMI: Shocker Aussie hike sends global calming signal- AntonyMCurrie
An ibis bird perches next to the Reserve Bank of Australia headquarters in central Sydney, Australia February 6, 2018. REUTERS/Daniel Munoz/File Photo - RC21WU93203R
MELBOURNE, Oct 4 - Headline inflation Down Under is running at 7%. Yet the Reserve Bank of Australia on Tuesdayby just 25 basis points, half of what the market expected. Rather than panic that Governor Philip Lowe has thrown in the towel, traders in stock, bond and currency markets gave him the thumbs up. There are reasons to slow the tightening: global bond yields have been falling in recent days, suggesting the worst of the inflation crisis may be over.
Australia, on the face of it, ought to be struggling after five consecutive 50 basis-point increases. Most of its home loans are variable rate, after all. But only a third of properties carry a mortgage; some 40% of those have so-called offset accounts – savings that reduce interest payments. Aussies were at the end of last year on average almost four years ahead on repayments, which they can often take back if needed. These create some handy buffers against the pain of rate increases.
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