NAB Change Rates Forecast

NAB have brought forward expectations for the next rates hike (attached). I should point out that they had forecast rates to drop to 2% by the end of the year. Personally I think we really need to look at the data over the next two months to see if the economy can hold up post the stimulus packages. Having said that the housing auction clearance rates were very strong on the weekend with nearly 72% of residential properties sold in Sydney compared to 46% this time last year. The RBA is well aware that if growth takes off with cash at 3% the housing sector will explode. In the low rate environment post 1987 housing prices doubled in the space of a year.

The RBA are likely to keep cash rates unchanged when they meet this week.

This morning ANZ has reported a slowdown in the rate of increase of its bad debts - the majority of its bad debts come from New Zealand. It also looks like it's on track to match its 2008 cash profit of $3.3bln.