why it&#039;s hard to see interest rate rising in near term

Originally posted by empror ↑

While the $Aus sits in the high $0.78-0.80 range , with momentum. There is very little room for the Reserve to raise rates without killing the economy. This is why I struggle to understand how the general news media seems to be so sure interest rates will rise ? When you have so many pro growth forces working simultaneously in the US, yet inflation is virtually non existent the US dollar will continue to stay low. The $Aus will remain in it current trading range. The other factor to consider is with all this stimulus going on in US and yet inflation non existent are we seeing real growth in US ie for every $US dollar spent to stimulate a positive return on real growth $1.20 generated or are we see a negative return on US economy $US 0.50 return. The data seems to indicate the later which is why I believe the $US is trading lower as the institutional investors see this as well, adding to this the rising US debt . I can't understand at this stage why there is a belief that interest rates will rise? Investing.com - The U.S. dollar fell on Friday after rallying to a one week high after the U.S. jobs report showed inflation remained weak. The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.10% to 90.02 by 11:24 AM ET (16:24 GMT), after reaching a one-week high of 90.34 after the release of the jobs data. The economy added nonfarm payrolls of 313,000 in February, which was more jobs than expected, according to data released payrolls processor ADP on Friday. Hourly average earnings rose 0.1% month-on-month, below a forecast of 0.2%. The low earnings numbers eased investor concern about the possibility of rising inflation. However, the dollar was pressured by concern that the Federal Reserve won’t raise interest rates higher than expected. Lower interest rates encourages investors to invest in other assets besides currency. Earlier Friday, the Bank of Japan left its monetary policy unchanged and offered no new clues on when and how it might begin winding down its stimulus measures.USD/JPY was up 0.67% at 106.92, while USD/CHF fell 0.18% to 0.9494. The euro tinched higher, with EUR/USD up 0.11% at 1.2324, while GBP/USD rose 0.46% to 1.3872 Elsewhere, the Australian dollar was stronger, with AUD/USD up 0.69% at 0.7842, while NZD/USD increased 0.37% to 0.7290.

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Yes the Aussie is high, however 3 - 4 US rate rises will bring it under 75c. From there the carry trade will also have an impact of USD buying pushing our Aussie lower as well. The Aus economy ain't crash hot across a number of areas.The only saving grace at the moment is commodity prices, however a little bit of a correction and the Aussie goes down. You also have Trump economics in play and he is OK with running deficits so the USD won't be running like a bull.

I am of the camp that the RBA will be able to raise rates once this year, regardless of inflation.

The whole thing about inflation is dead. Wasn't QE supposed to make is easy for businesses to borrow cheap and lend out so that inflation rises? That went well, all companies did was park the money with respective reserves (even if they were negative rates), do buybacks, cut costs, etc. The natural world economy has been manipulated by fiscal and monetary policies where the end result has seen asset prices and debt balloon. I was reading an article the other day where it looked at the US Fed over the last few decades and recessions occurred when the US Fed started the cycle of raising rates as they were always behind the curve with inflation jumping. Will it be the same again ... who knows. Music can't keep going on forever ...