At any rate...
Another very handy speech from the Reserve Bank this week, this time from Assistant Governor Kent.
As trader Kit Lowe noted on Twitter below, there has been some tremendous hyperbole about the rising cost of borrowing in Australia.
It's obviously the case that interest rates in the US have increased, although with the yield curve recently inverting the Federal Reserve may be getting closer to a neutral setting now.
As for Australia's funding costs and housing lending rates?
The Reserve Bank summarised this neatly in one chart.
Kent noted that:
'Changes in monetary policy settings elsewhere need not, and do not, mechanically feed through to the funding costs of Australian banks, and hence their borrowers are insulated from such changes'.
There are some useful explanations of hedging practices, and how Aussie banks are not forced to acquire US dollars.
There will most likely be no hikes in the cash rate any time soon either.
The RBA's SOMP forecasts have suggested underlying inflation might get back to 2¼ per cent by the end of 2019.
There are, however, some downside risks (the oil price which has very quickly nosedived from above US$75 per barrel towards $50, for example).
Cash rate futures imply that rates may well be on hold throughout all of 2019, and most of 2020 as well.
