The Global Interest Rate Increase Cycle Is Open? The Australian Interest Rate Is Like A Tornado?

On Wednesday, the Canadian central bank governor Stephen Poloz said in an interview with the media that Canada's economic growth is "steadily" digesting the financial crisis in this century and the excess capacity caused by the collapse of international oil prices two years ago. "We are approaching a new interest rate policy, so I do not want to anticipate it.

And since it is steadily consuming.

We need to consider at least the overall situation.

At the beginning of this month, Poloz had said that the rate cut in 2015 completed the mission of promoting growth.

In the first quarter of this year, Canada's GDP grew by 3.7% over the same period last year, the fastest growth rate in G7 countries.

Poloz's assessment of growth in the first quarter was staggering.

After the Poloz speech, Lynn Patterson, deputy governor of the Central Bank of Canada, confirmed that the oil price shocks had generally been over, suggesting that no longer needed low interest rates.

The above speech by Poloz and Patterson further stirred up the expectation of the central bank's decision to raise interest rates two weeks later.

BMO Capital Markets, an investment bank in Montreal, Canada, commented that Poloz's speech on Wednesday is the last straw for the Canadian Central Bank to raise interest rates on the 12 day of next month. This is a very strong and clear signal.

Poloz is the third central bank governor to release monetary tightening in two days.

On Tuesday, Delagi, President of the European Central Bank, affirmed the economic recovery in the euro area, saying deflation was replaced by another inflation factor.

Market speculation, the ECB may begin to reduce the size of debt purchase as early as this fall.

On Wednesday, Poloz spoke earlier. Carney, the governor of the Bank of England, said it is necessary to remove some stimulus under certain conditions. The decision making level has clearly limited the tolerance of inflation over the target, and will raise interest rate related issues in the coming months.

After Carney's speech, the pound rose to more than 1% on the dollar, and the price of British debt fell during the period 10, and the yield rose more than a month high.

"If you are the millennial generation, more than 5% of the interest rate is hard to imagine.

But this is the norm.

What expectation do we have for the interest rate in the foreseeable future? "Andrew Macken, an analyst at Roger Montgomery, an investment analyst, said.

To illustrate this issue, he quoted the interest rate charts of the UK and us over the past 300 years, drawn by investment company PIMCO.

In the 250 years before the baby boom generation, nominal interest rates fluctuated between 3%-6%.

The baby boom generation experienced an "ultra-high" interest rate in early 1980s, and interest rates gradually returned to normal.

But in any case, the figure clearly shows that today's interest rate is at its lowest level in 300 years, which means that "upward return" is an inevitable trend.

In the long run, under the current economic and global background, it is hard to imagine that interest rates will rise sharply in the coming months or even years.

Of course, we can not ignore the current tightening of the US Federal Reserve. The Central Bank of Canada and the Bank of England tighten up on tightening. China's deleveraging, the European Central Bank is looking for easing exports. Only the Bank of Japan looks like a dove.

But there is a huge gap between the 7 year's easing policy and the future austerity policy.

The global central bank can not continue to be relaxed, and if the Central Bank of the world follows the Fed's tightening, the potential risks of changes in risky assets are still unpredictable.

Canada's economy is similar to Australia's economy.

Canada's interest rate increase, does Australia meet?

Swiss securities analysts pointed out that Canadian dollar raising interest rate is due to two factors. First, Canada's economy is improving and the economy is back on track. Canadian oil producers have increased their productivity, especially the shale oil industry, and Canada's annual growth rate is expected to reach 3% to 4%.

The second is the rise in oil prices, which is also an important factor in supporting the Canadian dollar.

Australia's economy is clearly not as optimistic as Canada.

The latest data show that

The first quarter growth of 0.3%, although many media take "create nearly 26 years without recession record" make a big fuss, but this month, Australian Central Bank President Philip Roy in Australian National University's Crawford forum for Australia's economy analysis and prospect, stressed that for the recent "Australian economy continuous growth for 26 years without recession" argument, do not do the decomposition reading, and pointed out that an economic reform direction is to realize that the driving force of economic growth has turned from natural resources to service industry.

In June 15th, the unemployment rate of the Australian Bureau of statistics dropped unexpectedly, and the employment data was substantially better than expected. The unemployment rate in 5 fell from 5.7% to 5.5%, and the employment growth rate was higher than expected. The monthly full-time employment increased by eight months in a trend. The performance in the past 5 months was particularly strong, with an average monthly growth rate of 20 thousand.

On paper, "good" still can not hide a sharp problem: a high proportion of household debt is still buried in the Australian economy, "time bomb".

Moodie recently lowered Australia's "macroeconomic situation" from "very strong" to "strong". Then, the long-term rating of Australia's 12 banks, including the four largest banks, dropped from Aa2 to Aa3, and Mr Yu said that 189% of the residents' debt income was "particularly worrying".

The growth of household debt and high unemployment rate, together with the massive issuance of high-risk mortgage products such as "paying interest only", made real estate risk the biggest gunpowder barrel.

High household debt is increasing financial pressure. As Moodie said, "any increase in financial pressure of residents may impact consumer confidence and consumer spending, which has an indirect negative impact on overall economic activity."

It is possible to raise interest rates 8 times in two years? Perhaps in this time when everyone talks about raising interest rates, it is too outdated to talk about raising interest rates.

In recent days, the Australian media's eye-catching explosive headline is, "members of the former board of the RBA said Australia could raise interest rates eight times in the next two years".

The report reads: Edwards told the website of the Institute of international policy, the Australian Federal Reserve predicts that inflation will return to target in the context of stronger global economy, and the economic growth rate will increase to 3%.

Under such circumstances, the RBA may have considered the interest rate increase process.

He also said that in theory, Australia's long-term cash interest rate is about 3.5%, lower than the average interest rate of 5.2% over the past 20 years.

The RBA hopes to tighten monetary policy in 2018 and achieve its goal in two years, which will require the RBA to raise interest rates four times a year, each time.

Increase by 0.25%.

But if you go to the website of the LOI International Policy Institute to read this article and read the full text, you will find that this view is not so sensational.

First, the article uses the expression "distinctly possible" to speculate on raising interest rates.

Second, there is a precondition for such a rate increase, that is, if the if the RBAs economic forecasts prove correct is achieved, the economic forecast of the Australian Federal Reserve will not necessarily become a reality. It is just the best guess for everyone.

Every quarter, the Australian Federal Reserve releases the possibility of forecasting, which is very broad.

The article also stressed: "in any case, the pace of monetary tightening depends on the strength of the economy.

If household consumption is weak, non mining investment is weak, Australian dollar is strong and employment growth is not enough, then the interest rate curve will be more gentle and the pace is slower.

In other words, there are many reasons why the rate of "obvious possibility" will not come, especially the lack of family consumption.

However, even if the central bank does not "voluntarily increase interest rates", perhaps another bad situation should be considered - forced to raise interest rates.

Prior to Moodie's downgrading of Australia Bank, S & P has placed Australia's three a rating in "negative observation". The main reason for the threat of rating is Australia's debt problem.

If the S & P starts to lower Australia's credit rating, there will be a significant outflow of capital from debt to Australia.

According to the size of debt and the size of foreign exchange reserves, if domestic and foreign confidence in the Australian economy begins to waver, it is necessary to raise interest rates substantially, otherwise the consequences will be difficult to control.

The Australian Prudential authority conducts stress tests on banks and other financial institutions every year.

But the last Prudential issued the test standard and result in 2014.

Two situations were simulated in the stress test.

First, GDP dropped by 4%, the unemployment rate rose to 13%, and house prices dropped by 40%.

The two is the sharp rise in interest rates.

At that time, the Prudential authority concluded that the bank can cope with the above pressure, but it is not comfortable.

Almost all banks' dividends are "severely limited".

In the final analysis, however, stress testing is only a prediction and simulation.

When interest rates really come, those who will sigh "see him rise high buildings, see him feast guests, see him collapsed" is now enough sober?

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