Why we’re in two minds about rates

Financial market have diverged sharply from the Reserve Bank’s view on rates, and institutions are split on whether there’ll be further cuts or hikes. The most likely scenario is something in the middle.

Financial markets are not listening to the Reserve Bank. According to the pricing of the futures market, there is now very little prospect of a further interest rate cut in the current cycle and if anything, we should be preparing for interest rate hikes in the early part of 2014.


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