Banks are now ready for negative interest rates following consultation from APRA. If you do more research you will find that the IT software had to be amended to accept negative numbers.

Operational preparedness for zero and negative interest rates

Monday 2 May 2022

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Letter to ADIs: Operational preparedness for zero and negative interest rates PDF 439.87 KB

Published 2 May 2022

On 28 October 2021, APRA released its expectations regarding ADIs’ preparedness for zero and negative interest rates. Following this, in December 2021, a number of ADIs requested an extension beyond 31 July 2022 for meeting APRA’s expectations, citing market conditions and resource pressures due to other priorities.

Having considered the request and ADIs’ feedback that they are prepared, or could be prepared at short notice, for zero and negative interest rates on products that are more likely to experience such rates, the previously advised timeframe of 31 July 2022 is therefore no longer considered relevant. APRA is reviewing its broader strategic approach and will provide a further update on its expectations at the appropriate time.

Contact

ADIs requiring additional information should contact their responsible supervisor.

Yours sincerely,

Therese McCarthy Hockey
Executive Director
Banking Division

US 10yr bond yield has come down after hitting resistance on the chart. Usually coincides with bottom of the market. But fundamentals regarding high interest rates, high inflation & Ukraine war remain unchanged so may not be bottom yet.

Interest rates will go up fast this year & come down fast sometime next year. RBA will not be able to raise rates much higher than 1.5% pre-Covid due to banks having high exposure to property & high household debt. They will collapse the property market if they raise rates too high. Could borrow at 2% during latest cycle lows but this will most likely drop to 1% when RBA rate is negative.

Will be interesting to see what happens. PE & TTM multiples will get very high with negative interest rates & QE. The financial system is addicted to low rates & QE thus currently suffering withdrawal symptoms. Sooner or later it will be pumped with more money & get extremely high again.

Rates are going up, then straight back down: Macquarie’s Shvets

Jonathan ShapiroSenior reporter

Updated May 4, 2022 – 11.33am,first published at 10.38am

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Central banks will be forced into a dramatic “back pedal” and will be considering cutting rates within 12 months just as markets expect policy rates to peak.

That is the view of Macquarie’s global head of strategy, Viktor Shvets, who is of the view a slowing global economy and a winding back of government spending will mean the inflationary forces will subside and economies will need support.