The Reserve Bank of Australia raised rates 25 basis points to a 15-year high. Then they said more hikes might happen later. This is like getting punched in the face and having the guy tell you he's keeping his fist clenched for round two.
Economists polled by Reuters called this one correctly. They predicted 25 basis points. They got 25 basis points. Congratulations to every economist who successfully predicted that a central bank would do exactly what it said it would do. Your parents must be so proud.
The real comedy here is the phrase "not off the table." Central bankers love this phrase because it means absolutely nothing while sounding like it means something. Rates could go up. Rates could stay flat. Rates could theoretically go down if a meteor hits Parliament House. None of these options are off the table. The table is infinite. Everything is on the table. The table is a conceptual nightmare.
Retail traders in Sydney are now refreshing their mortgage calculators every four minutes. They're typing in new numbers. They're watching their monthly payments climb. They're Googling "how to eat ramen for every meal" and "is a tent considered a primary residence for tax purposes."
The 15-year high part is fun because it implies Australia had rates higher than this back in 2011. Remember 2011? The iPhone 4S had just come out. People still used Facebook without feeling shame. Housing was affordable in exactly zero Australian cities but at least rates were higher so you felt better about not being able to afford anything anyway.
The technical analysis here is straightforward. Support levels don't matter when the central bank explicitly tells you they're going to keep punching through resistance. Your Fibonacci retracements are useless. Your moving averages are decorative. You're trading against a stated policy objective with a press release attached.
Australia looked at its economy and decided the beating will continue until morale improves.
Photo by Rodger Wang on Unsplash
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