Federal funds rate

• ARCHBOLD, Ohio, Feb. 13, 2024 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2023 fourth quarter and twelve months ended December 31, 2023.
• Net income per basic and diluted share for the 2023 fourth quarter was $0.41, compared to $0.53 for the same period last year.
• Net income for the 2023 twelve months ended December 31, 2023, was $22.8 million, compared to $32.5 million for the same period last year.
• “Throughout 2023, the rapid rise in the Federal Funds Rate impacted our cost of funds and increased the competition for deposits.

• Schwab today introduced the Schwab Trading Activity Index (STAX), offering timely insights into retail trading behavior from one of the industry’s largest retail investor client bases.
• “The introduction of STAX is a reflection of Schwab’s leadership position in the industry and our deep understanding of trading behavior and sentiment.
• “The holidays tend to be an optimistic time of year for many, and this year was no exception among Schwab’s clients,” said Joe Mazzola, Director of Trading and Education at Charles Schwab.
• Popular names bought by Schwab clients during the period included:

• At its meeting last week, the US Federal Reserve kept its official interest rate on hold.
• Reserve Bank Governor Michele Bullock’s statement accompanying Tuesday’s hike in Australia’s cash rate makes it look as if we’re about to join that club.
• It makes it look as if this hike from 4.1% to 4.35% – a 12-year high – will be the last.

The RBA has taken our insurance

• The statement makes it look as if it wanted to take out insurance.
• While the bank still expects inflation to continue to fall, it says progress now looks “slower than earlier expected”.
• It isn’t that it thinks inflation won’t keep coming down; it’s that it wants to be sure it is.

Australian hikes hit harder than in the US

• The US, the UK, the EU, Canada and New Zealand all have higher official rates than Australia.
• Here’s why: almost all US home borrowers are on fixed rates, meaning their required mortgage payments don’t increase.

• And US fixed rates are nothing like Australian fixed rates.
• The typical term in the US is 30 years, rather than the two to three years common in Australia.
• This means that, as long as borrowers in the US don’t refinance or move homes, their payments are fixed for the entire term of their loans.
• After a year of less-high Australian rates, Australian consumers are buying 1.7% less.

‘Painful squeeze’

• She also noted others were benefiting from rising housing prices, substantial savings buffers and higher interest income.
• Bank calculations suggest one in 20 variable-rate borrowers are now going backwards – paying more for essential expenses and housing than they earn.

A frugal Christmas, before possible rate drops in 2024

• It is also looking like prices scarcely increased at all last month.
• The Melbourne Institute inflation gauge, which comes out ahead of the Bureau of Statistics gauge and broadly tracks it, fell 0.1% in October.
• It’s pointing to a frugal Christmas in which retailers are going to have to discount if they want to move goods, taking further pressure off inflation.
• Read more:
  Petrol is holding up inflation – the 7 graphs that show what's happening to prices and what it will mean for interest rates

Peter Martin is Economics Editor of The Conversation.