Aussie interest rates to abate

Used in isolation, the study below tells me to to ponder a couple things;

1. buy and fix my term deposits and/or
2. leave borrowings as variable. In other words, don’t lock them in.

When coupled with other observations in government bond yields and deflating commodity prices, it should (already is) lead towards lower inflation and GDP readings…….hence interest rates in the money markets should moderate by a 1% or little more, depending on the maturity you are watching.

For example, the Australian 2 year bond yield may decline from its current 3.58% to around the 1.80% region.

While the 90 day bank bill may ease from 3.47% to 2.40%.

The Reserve Bank of Australia policy changes will come many, many months later, for they are not a leading indicator nor a barometer.

May 25, 2023

by Rob Zdravevski

rob@karriasset.com.au