The Rate Debate: Recent Episodes
Darren Langer and Chris Rands
What do you get when you throw a 32-year-fixed-income veteran into the room with a 32-year-old fixed income millennial? The Rate Debate. Darren Langer and Chris Rands are seasoned fixed income specialists with a deep passion for bond markets and an opinion on just about everything. And while they may sit facing each other at work, they don’t always see eye-to-eye. Tune-in each month to hear their take on the Reserve Bank of Australia’s interest rate decision and other macro matters that are influencing markets.
This month, Co-Head of Fixed Income Darren Langer and Investment Manager Jessica Ren celebrate the 50th episode of The Rate Debate. With 50 insightful discussions on the RBA's decisions and their market impacts, from unexpected rate cuts to bold hikes, they've covered it all.
To mark this milestone, they are joined by special guest Hans Lee from Livewire Markets. Together, they tackle the RBA's most recent monetary policy decision, unpack the recent chaos caused by the US jobs report and explore whether recession fears are throwing investors off course.
But the big question remains: Is Australia on the tail end of a global macro regime change?
Pundits of Australia's economy expect the central bank will maintain its default rhetoric of “vigilance against inflation risks”. However, given the number of “ifs and buts” in its most recent statement, the RBA seems to be less certain of the next move.
In episode 49 of The Rate Debate, Co-Head of Fixed Income Darren Langer and Investment Manager Jessica Ren explore whether the RBA's gentler approach will continue to work, discuss the global interest rate-cutting party that is underway, debate if Australia should follow suit without considering its own circumstances, and what this means for fixed income investors.
The RBA is, and continues to remain an independent central bank, committed to openness, transparency, and accountability. Despite this, perceptions in the Australian market continue to challenge the credibility of its independence.
In episode 48 of the Rate Debate, Darren is joined by Investment Manager Jessica Ren to discuss the latest rate decision, share their opinions on why monetary policy shouldn't be run in isolation but hand in hand with fiscal and regulatory policy and unpack why the fight against inflation will be a slow and bumpy ride.
The RBA has scrapped any hints of potential further hikes, sparking speculation on whether it will continue to be open on hiking, despite pivoting to a more neutral guidance.
In episode 47 of The Rate Debate, co-head of Fixed Income Darren Langer and Investment Manager Jessica Ren unpack the RBA's "shift in language" from a tightening bias to a neutral rate outlook, share their thoughts on the rebound of consumer confidence and evaluate the likelihood of a policy shift by global central banks this year.
The RBA may have started its new regime of two-day meetings and press conferences to improve transparency, yet the outcome remained the same as it was when it last met: no change to the cash rate.
In the first episode of The Rate Debate for 2024, co-head of Fixed Income Darren Langer is joined by Investment Manager Jessica Ren to analyse the RBA’s new approach, unpick the labour market outlook, and discuss whether geopolitical tensions are likely to be the largest challenge facing central bankers in the year ahead.
Find out more in episode 46 of The Rate Debate.
The RBA has granted a festive reprieve for mortgage holders, keeping interest rates on hold in line with expectations after inflation continued to slow. The year 2023 was characterised by a period dominated by inflation risk, geopolitics and monetary tightening. Will these economic conditions persist in the new year?
In the final episode of The Rate Debate for 2024, Darren Langer and Jessica Ren discuss their outlook on the global economy, share their views on whether we can expect a hard or soft landing, and explain why now is a good time to own fixed income.
The RBA delivers a Melbourne Cup rate hike to curb persistent inflation. Rising energy and service costs are contributing factors, but the post-pandemic spending spree, favouring experiences over possessions, raises questions about “funflation” stoking inflationary pressures. Will higher rates further fan the flames? Darren is joined by his new sparring partner, Jessica Ren, to explore these dynamics and more in episode 44 of The Rate Debate.
September was a tough month for the fixed-rate bond market, but on the flip side, credit spreads narrowed. In this month’s episode of The Rate Debate, Darren is joined by senior credit portfolio manager Phil Strano to give their insights and discuss the impact of a default cycle as quantitative easing ends, and monetary policy starts to normalise.
Outgoing Reserve Bank governor Philip Lowe finished his tenure as he began by keeping rates on hold as inflation cools.
With inflation past its peak, can we expect rate cuts on the horizon, and could a softening of China's economy bring them even closer or will services inflation drive the incoming governor Michele Bullock to deliver a rate rise later this year?
Darren is joined by special guest Roy Keenan, Co-Head of Fixed Income, to explore this and the outlook for credit markets in episode 42 of The Rate Debate.
Amidst ongoing economic uncertainties, the RBA has seen fit to keep rates on hold for a consecutive month and wait to see how the lagging effects of 12 rate hikes play out.
While inflation is decelerating, uncertainty abounds over consumer spending, falling productivity and wage growth. Will the central bank's aim to deliver a soft landing make it harder to get inflation back to target, meaning that this pause is short-lived?
Darren is joined by special guest Phil Strano, Senior Portfolio Manager in charge of credit research, to explore this and more in episode 41 of The Rate Debate.
The RBA has paused on hiking rates (for now) creating some big winners and losers.
This month Darren is joined by special guest Roy Keenan, Co-Head of Fixed Income, to identify the potential warning signs for lenders, discuss whether Australia's banks will remain "unquestionably strong", and examine which companies in the consumer sector will stand to win or lose.
Darren and Roy discuss this and more in episode 40 of The Rate Debate.
Australia has been delivered another rate hike in an attempt to "quash" inflation. This month Darren debates with special guest Tim Toohey, Head of Macro and Strategy, the risks posed by rising wages and weak productivity growth, and why the RBA continue to change its goalposts to drive down inflation.
Hitting the economy with surprise after surprise, the RBA takes another fresh assault to tackle inflation head-on by taking the cash rate to 3.85%. Continued mixed signals from Australia’s central bank are causing havoc within the domestic economy. With the RBA not ruling out further rate hikes, Darren and Chris look into the impact on markets and discuss their thoughts on the future of the RBA in episode 38 of The Rate Debate.
Despite the RBA's massive rate "U-turn" and their insistence that we are in the final stage of the hiking cycle, has it come too late to stop a recession? Chris Rands and Darren Langer examine the factors influencing the market and reveal their expectations of the economy and the Australian credit market in episode 37 of The Rate Debate.
After hiking for the tenth consecutive month, the RBA has Australia questioning whether its repeated actions to combat inflation will cause an overshoot and push the nation into recession.
From a wage-price spiral, rising unemployment, and faltering GDP, it seems the consumer and government sectors have been the most exposed to the ongoing "inflationary pulse". Do we think Australian companies will lead the charge and are we starting to see Fixed Income revert to more atypical behaviour following a challenging 12 months?
Chris and Darren debate this and more in episode 36 of The Rate Debate.
At its first meeting for 2023, the RBA hiked rates for the ninth consecutive month to urgently tame inflation, telling the market to expect more to come. Given Australia’s inflation levels have lagged the US, is Australia six months behind? or are we going into a period of higher inflation than the rest of the world?
Chris and Darren debate this and more in episode 35 of The Rate Debate.
The RBA delivered an eighth-straight rate hike to hit a 10-year high to round out a tumultuous 2022.
In the final episode of The Rate Debate for the year, Darren and Chris discuss their thoughts on further tightening next year, whether a global recession could solve the inflation problem and the impact of the fixed-rate mortgage cliff on Australian homeowners and the domestic economy.
The RBA hiked rates for the seventh consecutive month as it seeks to stifle inflation. Global central banks continue aggressive monetary tightening despite early signs of moderating inflation and weaker forward growth indicators.
With the consumer bearing the brunt of high inflation and tighter financial conditions, the RBA has backed away from aggressive rate hikes for now. Will other central banks follow, or is this a temporary reprieve?
Chris and Darren debate this and more in episode 33 of The Rate Debate.
The RBA hiked rates for the sixth consecutive month. With lead indicators showing signs of inflation coming off the boil and European banks starting to see stress, cracks are forming in the credit and equity markets. Have central banks tightened too aggressively risking a recession?
Chris and Darren debate this and more in episode 32 of The Rate Debate.
Australia’s central bank has now raised interest rates five months in a row. It’s the most aggressive tightening cycle since 1994. With more hikes expected, and house prices in Sydney and Melbourne on the slide, cracks are starting to appear.
Chris Rands and Darren Langer discuss how further rate hikes will impact the housing market, unemployment rate, and the wider economy in episode 31 of The Rate Debate.
After hiking for the fourth consecutive month, the RBA’s tone has shifted to suggest a pause at the September meeting is possible, reflecting in part the troubling signals emanating from markets as the US teeters on the brink of recession and conditions continue to cool across the globe.
As lead indicators continue to flash red – consumer confidence remains at alarming levels and housing is rolling over – can Australia’s central bank successfully thread the needle and avoid an outright stalling of the Australian economy?
Central banks state they are not seeing signs of a recession as they continue hiking rates to curb spiralling inflation. But, with forward indicators flashing red across the board, low consumer confidence, declining forward sales, the US yield curve beginning to invert and the continued drop in the global equities, markets are telling us they see slowing growth ahead.
Will the RBA pause in August or will they continue to tighten at the fastest rate we have seen in 30 years and drive the country into a recession?
With rates on the rise, higher inflation and wages below expectation, has Australia's central bank panicked by hiking rates by 50bps, the largest monthly move in over 20 years? The RBA's charter is to ensure the economic prosperity and welfare of the Australian people, which increasingly appears to be being overlooked in favour of an inflation target that isn't easily achievable without causing recession.
Darren and Chris discuss this and more in episode 28 of The Rate Debate.
The RBA hikes rates by 25bps, with more set to come in 2022 as Australia’s central bank attempts to keep a grip on inflation. With oil and commodity prices set to continue to be at elevated levels due to Russia’s war with Ukraine, could a series of rapid rate hikes push the Australian economy into recession?
Darren and Chris discuss this and more in episode 27 of The Rate Debate.
The RBA expects to see economic data that will drive them to hike interest rates earlier than expected. Markets have already jumped the gun and priced future hikes into bond prices.
Is the economy as strong as central banks believe, and will interest rates go up as aggressively as the market suggests?
Darren and Chris discuss their take in episode 26 of The Rate Debate.
The RBA continued to keep rates on hold this month even though Inflation picked up more quickly than they expected. The length of time it took to resolve supply chain problems, which have been pushing up prices continues to be a source of uncertainty regarding the inflation outlook, as are developments in global energy markets. With Russia’s war with Ukraine continuing to play out, and the market slowly recovering from a pandemic, what’s the outlook for interest rates?
Tune in to hear Darren and Chris discuss this in episode 25 of The Rate Debate.
The RBA announced an end of QE and kept interest rates on hold as they wait to see stronger wage growth. If inflation continues to rise faster than forecast, and the RBA hikes earlier than expected, what could the knock-on effect be on markets?
Tune in to hear Darren and Chris discuss this and more in episode 24 of The Rate Debate.
One of the key factors that will make or break the case for the RBA tightening in 2022 will be the reopening trade. Will consumers start spending heavily as is forecast, or will the threat of inflation and a rise in interest rates scare them off? Darren and Chris discuss their views in the last episode of The Rate Debate for 2021.
With the RBA seemingly MIA last week, the market was left to its own devices. Not surprisingly, bond yields spiked as multiple rate hikes were priced as early as mid-2022. Will mortgage rates rise that soon? And can the market trust the RBA going forward?
Darren Langer and Chris Rands discuss their views in episode 22 of The Rate Debate.
While the RBA maintained its view of holding rates until at least 2024, Australia’s central bank has now acknowledged the need to curtail the housing boom and signalled the potential introduction of macroprudential measures.
With APRA set to tighten lending standards, will we see heat come out of the red-hot domestic housing market?
Darren and Chris discuss their thoughts on this topic and more in episode 21 of The Rate Debate.
The RBA expects a material slowdown in economic growth in September, but is forecasting a bounce-back in December that will stretch into the first half of 2022. Given market uncertainties, is the RBA’s confidence justified, and could it mean higher interest rates are coming?
Darren and Chris answer this question and more in episode 20 of The Rate Debate.
The RBA continues to be optimistic despite the current state lockdowns, forecasting the economy to bounce back quickly once the virus is contained. Is the RBA taking a gamble on their positive outlook given the uncertainties in the market right now? Tune in to hear Darren Langer and Chris Rands debate their views in episode 19 of The Rate Debate.
The RBA is sticking with their timing of 2024 before they look at an increase in interest rates. The market believes that inflation will be back sooner than the RBA is forecasting. What’s driving the differing opinions and who’s right? Tune in to hear Darren Langer and Chris Rands discuss their views in episode 18 of The Rate Debate.
The market has seen a small increase in fixed-rate mortgages from some of the banks. Is this the beginning of a tightening cycle and has the Australian consumer seen the last of ultra-low interest rates? In episode 17 of The Rate Debate, Darren Langer and Chris Rands discuss if a potential increase in inflation combined with a rise in interest rates could derail the housing market and the impact on bond yields.
The government's policies have been focused on spending and have encouraged Australians to borrow more, driving strong credit growth. However, the more indebted Australians are, the harder it is for the RBA to increase interest rates. In episode 16 of The Rate Debate, Darren Langer and Chris Rands discuss whether Australia could fall into a potential debt trap of low growth, low-interest rates, and no inflation if the RBA gets it wrong.
The RBA’s stimulus policies have boosted the economy post COVID-19 driving increases in house prices, retail sales, and employment but is this a double-edged sword? Darren Langer and Chris Rands discuss the impact of the RBA’s policies on future growth, and question who will pay for it in the long run.
Bonds experienced their fastest sell off since 2009, resulting in the largest one month rise in 10-year yields. Given the economic outlook is looking more positive globally, is the rise justified and where to next for bond yields? Darren Langer and Chris Rands delve into these questions and more in episode fourteen of The Rate Debate.
Everyone loves a good housing story and it’s looking like 2021 could become a best seller. But at what cost? According to the numbers, we’re still in an economic hole, and with immigration down 80% and the government’s income support program about to end, are we setting ourselves up for a down fall? Darren Langer and Chris Rands examine the factors influencing the market and reveal their expectations for house prices.
If anyone questioned the power of low interest rates to drive house prices in Australia, they only need look back at 2020. Despite COVID-19, the recession, high unemployment and stagnant wages growth, house prices in Australia stood firm. Find out why Darren Langer and Chris Rands believe house prices are set to climb and why a commodity boom could mark the beginning of an inflation run.
If the RBA cutting rates is the entrée for markets this week, then the outcome of the US election is the main course and dessert rolled into one. Tune in to hear Darren Langer and Chris Rands dissect the big picture for global markets and find out why fixed income makes so much sense right now—even with historically low rates.
Despite some industry heavyweights predicting a rate cut, the RBA kept rates on hold for October. What three reasons do Darren Langer and Chris Rands give that could explain the RBA’s decision? And could Donald Trump’s health really impact markets? Darren and Chris examine these topics and more in episode 10 of The Rate Debate.
Over the past few weeks, the RBA has started to change its narrative, suggesting that while negative rates are extremely unlikely, they’re not off the table. They’ve also hinted that a new bond buying program could be on the cards. Is the RBA just posturing or is change afoot? Darren Langer and Chris Rands examine these topics and more in episode 9 of The Rate Debate.
With Aussie bonds in high demand across the world, a growing demand for a more aggressive fiscal response from the Australian government, and a rise in COVID-19 cases in Victoria and NSW, is Australia ready for more monetary stimulus? Darren and Chris answer this question and more in episode eight of The Rate Debate.
Is the RBA too concerned with front end rates that are aimed at helping the banking sector at the expense of the taxpayer who, ultimately, will be picking up the interest cost of higher bond yields? And what will happen to employment and housing once Job Keeper comes to an end or the lockdowns are extended? Darren and Chris go toe-to-toe on these topics and more in this month’s edition of The Rate Debate.
Despite the RBA’s recent monetary and fiscal intervention, a recession still seems to be on the cards. Why is the RBA so unwilling to follow along with more unconventional policy and what are the implications of its ‘play-it-safe’ approach to solving our economic woes? Darren and Chris go looking for answers.
With an expected 10% contraction in GDP, rising unemployment, and inflation at the lowest level we’ve seen in decades, how has COVID-19 impacted credit markets and what’s next for interest rates?
The RBA has been buying up big, purchasing around $36bn in government and semi-government bonds throughout March. But when is enough, enough and can these efforts really help stave off a recession in Australia?
Darren and Chris give their view on the current situation.
In response to the coronavirus epidemic, the RBA cut the cash rate to 0.25% on 19 March and announced a number of QE measures. In the long run, will the government’s response deliver the benefits it is hoping for?
On 3 March 2020, the RBA cut rates by 25 basis points to 0.50% in response to the coronavirus. But have they cut too early? And what happens if markets are hit with another unexpected event? With so little fuel left in the tank, how will the RBA respond?
Darren and Chris explore these issues and discuss the hazards of credit in times like this.
Related articles: 5 big questions the RBA needs to answer in 2020 by Chris Rands http://bit.ly/38gA6Pz
Amidst the outbreak of the coronavirus, ongoing bushfires and global trade deals, Darren Langer and Chris Rands introduce their new podcast The Rate Debate to question the RBA’s latest rate decision and discuss news that’s making headlines.
Email Darren and Chris with questions you want answered in future episodes to: theratedebate@nikkoam.com