Quiet week from the FED and RBA holds rates steady

20 January, 2024
As at 9am, AEST.

Gold Spot Price $AU3308

Silver Spot Price $AU38.26

Platinum Spot Price $AU1384

The RBA has held interest rates steady at 4.35% and says that the war on inflation is far from over. For many Australians desperately holding on with high cost of living and increased mortgage repayments this is definitely not good news. Conservatively, we’re thinking the earliest we’ll see a rate cut is later this year. And if cost of living expenses don’t start coming under control, rate cuts could well be off the table until next year.

The RBA also stated that inflation isn’t due to return to their target range of 2-3% until 2025/26. This gives them a lot of time to hold rates as high as possible to ensure inflation is well and truly under control within the next 2 years.

Arguably Australians that are ‘feeling the pinch’ may well have gotten used to historically low interest rates. Interest rates over the past 30 years (shown here today) give a fascinating insight into how low rates actually were before the RBA began the most aggressive monetary tightening ever seen. 

Here are those charts.

Firstly showing rates in percentage since 1990.

And secondly showing the percentage change in base interest rates, executed by the RBA. Note how aggressively these were raised in 2022.

And of course, our monetary policy leaders are probably right. If we simply dropped rates back to where they were 3 years ago, every mortgage holder could well have an extra $1500 a month spare in their pocket. Through historical spending data, we know exactly where that money would go (most people spend, not save), thus reigniting inflation issues yet again. 

Meanwhile, Gold continues to range around $US2150 per ounce, and Silver around $US25 per ounce. Both are awaiting any economic weakness, before launching upwards again.

Gold daily, with 200MDA

Silver daily, with 200MDA

US500 Daily, with 200MDA

ASX200 Daily, with 200MDA