Interest Rates?

[Sojourner]

Interesting to hear on the ABC news today that inflation is running at less than expected. It was mentioned that Retail Spending is a long way down from where they thought it would be, so as a result interest rates are likely to stay on hold.

It was not very long ago that it was being spruiked that the Reserve would have to raise interest rates possibly two or three times this year, seems to have gone very quiet in that regard and I do wonder if the problem is now beginning to go in the opposite direction and people are not actually spending enough to keep the economy going?

Its been mentioned that new housing approvals are currently at less than half of what they were last year. One commentator said they thought it could be a two year turn around to get levels right again with the bonus having been dropped.

My thoughts are along the lines that the Reserve board may have overstepped the mark with their warnings and actually done some damage to the economy in the process. People are now holding back spending and being more careful when they do spend and looking at overseas sites and so on. The State Government have yet again ramped up their taxes and charges and people seem to be very reluctant so spend any money at all. Various tradies I know are doing quoting and getting very little work out of it. It seems to me that if it continues down this pathway that its possible that we could get a negative result twice in a row and hit a recession. It could be that the Reserve might actually have to cut interest rates to re-invigorate the economy. I suggest that this might be the reason why they have gone a little quite all of a sudden!

[dedja]

The State Govt has SFU to do with interest rates or the key measures that effect it ...

[Sojourner]

Except for raising inflation and increasing the cost of living. When people have to repay the mortgage and have to find extra funds to register a car or pay a doubled water bill, or any other State Government increased charge it places pressure on wages and interest rates.

[gossipgirl]

Except for raising inflation and increasing the cost of living. When people have to repay the mortgage and have to find extra funds to register a car or pay a doubled water bill, or any other State Government increased charge it places pressure on wages and interest rates.

agreed entirely its basic economics 101

[once_were_warriors]

I thing Mr Stevens words over the last 6 months have had the effect of two interest rate rises without having to actually implement them.

He would be a good poker player.

Most people have taken his advice and have reduced their uptake of debt and actually started to save moneys.

Unfortunately this hits consumer spending, interest rates to stay stable fore some time now unless China and India ramp up again.

[stan]

Most likely the RBA probably went one step to far. They simply wanted to people to hurt in order to slow down what is considered a slow economy. Well it had the desired effect really, just a lot faster and harder than they were expecting.

Housing market is down, building and sales, retail spending is down, the only really construction work is from the public sector and since most state governments are really struggling that will die off after this stint. Obviosuly the Fedral government is not going to be able to bang big bucks around now, inflation is less than expected, employment rate is a missleading figure due to the ABS way of measuring the labour force (just my opinion) and well companies are going to start the layoff process again.

[Sojourner]

Hence I do think the goal posts have moved to the point where the RBA actually need to do a cut to interest rates to stimulate the economy. If we continue to flat line I do think we are a very real chance of going into another recession.

[Jimmy_041]

If you recall, our illustrious Reserve Bank increased interest rates during the GFC and then had to slash them to save our economy from disaster.
IF they increased rates now, this country would slip into a depression within 12 months and send a vast number of our people to the wall
Instead of having this one dimensional focus (on inflation) how about selling off some USD and get our $A under parity

[mick]

If you recall, our illustrious Reserve Bank increased interest rates during the GFC and then had to slash them to save our economy from disaster.
IF they increased rates now, this country would slip into a depression within 12 months and send a vast number of our people to the wall
Instead of having this one dimensional focus (on inflation) how about selling off some USD and get our $A under parity

I would be very happy if rates go up further and they will after the carbon tax. This means a greater income for me and a fair chance we won't have a Green/Labor goverment for at least a decade.

[dedja]

selfish bastard, it's all about me, me, me...

[mick]

selfish bastard, it's all about me, me, me...

Absolutely I ain't no socialist

[Hondo]

I agree with Soj's analysis which was why I was surprised to catch a news grab during the week suggesting that another rate rise may be on the cards before the end of the year.

[Sojourner]

I agree with Soj's analysis which was why I was surprised to catch a news grab during the week suggesting that another rate rise may be on the cards before the end of the year.

They seem to still be pushing that line although its getting much less in recent weeks, I suspect they will wake up and realise that instead of trying to create statements that alarm people which is wearing off anyway, that they might actually get more media attention by suggesting the reverse, yet in order to change there position will likely have to warm their audience up to the idea over a few weeks to at least give the appearance of being credible!

[mighty_tiger_79]

interest rates drop by .25%

[Jimmy_041]

Can't wait for Swan to take credit.

"We've deliberately screwed the economy up, so you can get an interest rate cut"

[southee]

Can't wait for Swan to take credit.

"We've deliberately screwed the economy up, so you can get an interest rate cut"

I'm sure swan will act like the messiah !!! As more businesses shut their doors and more people lose their jobs!!

Don't think the banks will pass it down though .

[Sojourner]

Bank of Qld have gone a .20% cut which seems pretty reasonable?

[mighty_tiger_79]

official rate down by .25 to 3%


of this .25 i think the most that will get passed on is probably .20

[gossipgirl]

official rate down by .25 to 3%


of this .25 i think the most that will get passed on is probably .20

the greedy banks have to keep increasing profits

[bulldogproud2]

official rate down by .25 to 3%


of this .25 i think the most that will get passed on is probably .20

the greedy banks have to keep increasing profits

Managed to refinance my mortgage with a credit union at 5.09% fixed for five years yet the banks are claiming they are doing it tough on 6.40.

Cheers