Interest Rates !!!!!!!!!!

[burto]

I don't know much about this kind of thing either but I'm fairly certain that banks don't get any say in the RBAs decision to move interest rates.

They don't, but he is probably suggesting it because the banks are increasing above the RBA's increase. But the banks don't really have a choice either because they need to shield themselves from the credit crisis in debt markets. It isn't their fault that a bunch of yanks are defaulting on loans that they shouldn't have been given anyway.

 

[morgoth]

They will be talking rate cuts late 08 to early 09. If we really think we will not be impacted by the melt down in the US we are kidding ourselves.

The RBA has simply lost their minds at the moment.

 

[Jimmy_the_Gent]

They will be talking rate cuts late 08 to early 09. If we really think we will not be impacted by the melt down in the US we are kidding ourselves.

The RBA has simply lost their minds at the moment.

If that's really case than the RBA is damned if they do and damned if they don't. I know a lot of people are pissed off at the interest rates rises but I'd be more pissed off if inflation was allowed to run away from us.

Maybe they're going to try to suffocate inflation as much as possible before dealing with any issues from the sub prime crisis.

 

[Scratcher Gillespie]

The RBA has simply lost their minds at the moment.

Are you kidding? The RBA has a mandate to keep inflation between 2 - 3%pa, which has been the basis for the current expansion as it prevents distortion of the system by inflation. CPI increases are now running at 4% - outside the mandated range. The only way the RBA can bring this down is via interest rates. Not sure what is so hard to understand about that.

 

[morgoth]

Are you kidding? The RBA has a mandate to keep inflation between 2 - 3%pa, which has been the basis for the current expansion as it prevents distortion of the system by inflation. CPI increases are now running at 4% - outside the mandated range. The only way the RBA can bring this down is via interest rates. Not sure what is so hard to understand about that.

Yep, but they went too hard, too fast. Spending was already slowing, they have smashed consumer and business confidence at a time when we are about to be hit by some major challenges in the financial markets. Most people I know have slashed spending and multiplier effect of that throughout the economy will have negative ramifications.

Throw in the self funded retirees who are watching their incomes and capital decline and you have some pretty negative stuff going on. Of course the national figures may look OK due to WA and QLD but SA, Vic and NSW are in for a tough time.

 

[Scratcher Gillespie]

Yep, but they went too hard, too fast. Spending was already slowing, they have smashed consumer and business confidence at a time when we are about to be hit by some major challenges in the financial markets. Most people I know have slashed spending and multiplier effect of that throughout the economy will have negative ramifications.

Throw in the self funded retirees who are watching their incomes and capital decline and you have some pretty negative stuff going on. Of course the national figures may look OK due to WA and QLD but SA, Vic and NSW are in for a tough time.

I reckon they went down too fast (and stayed there too long) post 2001. It was the movements back then which have caused the current rate rises to hit so hard (People thought that 4% was a sustainable long term rate and didn't plan for rises). Unemployment is still at multi-decade lows, and the economy is still humming along for the time being. If inflation is getting out of the bag, I'm fully supportive of the RBA raising rates to contain it. Inflation is bad for everyone (Including self funded retirees).

 

[Scratcher Gillespie]

For anyone who wants a better understanding of the issue, this speech by Glenn Stevens (RBA Govenor) is fantastic.

http://www.rba.gov.au/Speeches/2008/sp_gov_140308.html

 

[29-little-CHAMP]

I want that t.v plasma ... i want that sound system to go with it

mmmmm now i need foxtel ..... and all the channels ......( work ) things

getting a bit tite have to cut back your hours ,,,,, from 38 hours a week..down to 28 hours a week ...

shopping ,milk vegies fruit ie: going up all the time, less money to spend ?

more people outta work

we had it good for about 16 years ........ now it starting to hit

 

[Buckley is ripped]

Slower growth to halt interest rate rises
March 19, 2008 10:59am
Article from: AAPFont size: + -
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GROWTH in Australia will slow in the months ahead given a rise in borrowing costs and credit market woes, which will stop the central bank from raising rates again, according to a leading forecaster.

The Westpac-Melbourne Institute Leading Index of Economic Activity, which indicates the likely pace of economic activity three to nine months in the future, was 4.1 per cent in January, just below its long-term trend of 4.2 per cent.

It is the first time the index has slipped below the long-term trend since November 2005.

The index has also fallen significantly since November last year, when the annualised growth rate was 6.3 per cent.

Westpac chief economist Bill Evans expected growth to slow through 2008 and 2009. "We expect domestic demand growth to slow from the strong 5.7 per cent in 2007 to 3.8 per cent in 2008 and 1.9 per cent in 2009," he said.

"This slowdown will be driven by the Reserve Bank's clear commitment to rein in inflationary pressures and the impact on the economy of the dislocation in credit markets."

Around the world, the index said outlook for growth in the major developed economies "continues to worsen".

Rate rises ended

Mr Evans said today's result implies the Reserve Bank of Australia (RBA) is now at the end of its current tightening cycle.

"Westpac now expects that the RBA cash rate has peaked," Mr Evans said in a statement today.

"We do not expect that the RBA will see the need to raise rates again in this long tightening cycle, which began in May 2002."

But Mr Evans said interest rates would remain at these levels "for at least the remainder of the year".

Three of the four monthly components of the leading index increased in January, with dwelling approvals, real money supply and US industrial production (0.1 per cent) all higher.

But their gains were wiped out by a 10.9 per cent drop in the stock market index, the biggest monthly fall since October 1987.


Does this gives us an indication that we'll see interest rates drop next year ????