The Reserve Bank of Australia said the bar will stay open for a few more months, although current choices are limited. The RBA unexpectedly left rates unchanged overnight because they wanted more time to gauge the impact of what they’ve done already as they’ve raised 75 bps to 3.75% since Sept. They did say rates are still likely heading higher though “if economic conditions evolve broadly as expected.” Here, the RBA has rates at 3.75% and our Fed is worried about going to .50%. The surprise sent the AUD to a 5 week low vs the US$ and the ASX index rallied 1.8%. The rest of Asia rallied except China as they took further steps to tame property speculation by raising down payment requirements and interest rates for 3rd mortgages and told banks not to give RE loans for ‘investment and speculation.’ Greek bonds are down after the EC said they will accept Greece’s budget plan but said more may be needed.
