Another Rate Cut in December 2011
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I used to work for one of these monsters and I can tell you they are failing miserably on the international front. I guess the whole strategy of being part of an oligopoly doesn't work in other markets.
Any predictions on what fixed rates will do - I'm keen to fix and I remember at the most dire time 3 yrs ago, avg fixed rates were at mid-highish 5%s, apart from a couple of gems eg 4.99% for 3 yr offers. Whilst I'm not bullish about the economy turning within the next few months, I'm not convinced rates will head much farther south.
SLASH AND BURN: Swan plans to cut billions in spending
What effect will the following slashing and burning have on interest rates in December?
From: news.com.au
November 14, 2011 10:22AM
Billions of dollars in spending cuts will be announced when the Government releases the latest official assessment of the national economy before Christmas.
The reductions will be aimed at bolstering the Government's determination to deliver a Budget surplus in 2012-13.
And it will come in the face of persistent Opposition claims that the Government is driving Australia into dangerous levels of debt.
The trimming will be much narrower in scope than a mini-budget but will involve cuts totalling in the billions of dollars, not the millions, news.com.au understands.
Under this Government, spending adjustments have been made to coincide with releases of the Mid-Year Economic and Fiscal Outlook (MYEFO), the Treasury's review of national economic performance.
This time the degree of urgency has been ramped up by the economic woes in Europe and to a degree the United States, which are having a global consequences, including on our revenue from trade.
While sources down-played the prospect of a mini-budget, reported in the Financial Review this morning, they confirmed that work had begun on areas for spending reductions, and stressed the task would not be easy.
The Government says it has cut $100 billion in spending over four Budgets and that there are no easy savings left to be made.
It also argues that the $130 billion hit to revenues from the the global financial crisis had been worsened by the disruption in Europe.
And at the weekend Treasurer Wayne Swan confirmed his determination to get a surplus on schedule, saying it was vital to retain the confidence of global markets, and to assist the Reserve Bank keep interest rate down.
"While the long-term outlook for Asia remains positive, the clear message from my APEC meetings was that every economy in our region is feeling the impact of events in Europe,'' said Mr Swan in an Economics Note released yesterday.
"It's hitting the region's financial markets, unsettling businesses and consumers, and dampening trade. Obviously, this flows through to Government revenues, and will add to the $130 billion in revenue write-downs we've seen since the global financial crisis first struck.
"It will make the task of returning the Budget to surplus in 2012-13 a lot tougher, but we're determined to get there. The hit to Government revenues caused by the global turbulence means we'll have to continue making tough budget decisions.
"Maintaining our fiscal rigour is absolutely critical at a time when global financial markets are punishing those without discipline. One of Australia's great strengths is our very low level of public debt - it's less than a tenth of the average across major advanced economies.
"Our record of fiscal discipline helps underpin confidence in our economy and supports job creation. It also gives the Reserve Bank room to move on interest rates, as we saw earlier this month.'"
What effect will the following slashing and burning have on interest rates in December?
From: news.com.au
November 14, 2011 10:22AM
Billions of dollars in spending cuts will be announced when the Government releases the latest official assessment of the national economy before Christmas.
The reductions will be aimed at bolstering the Government's determination to deliver a Budget surplus in 2012-13.
And it will come in the face of persistent Opposition claims that the Government is driving Australia into dangerous levels of debt.
The trimming will be much narrower in scope than a mini-budget but will involve cuts totalling in the billions of dollars, not the millions, news.com.au understands.
Under this Government, spending adjustments have been made to coincide with releases of the Mid-Year Economic and Fiscal Outlook (MYEFO), the Treasury's review of national economic performance.
This time the degree of urgency has been ramped up by the economic woes in Europe and to a degree the United States, which are having a global consequences, including on our revenue from trade.
While sources down-played the prospect of a mini-budget, reported in the Financial Review this morning, they confirmed that work had begun on areas for spending reductions, and stressed the task would not be easy.
The Government says it has cut $100 billion in spending over four Budgets and that there are no easy savings left to be made.
It also argues that the $130 billion hit to revenues from the the global financial crisis had been worsened by the disruption in Europe.
And at the weekend Treasurer Wayne Swan confirmed his determination to get a surplus on schedule, saying it was vital to retain the confidence of global markets, and to assist the Reserve Bank keep interest rate down.
"While the long-term outlook for Asia remains positive, the clear message from my APEC meetings was that every economy in our region is feeling the impact of events in Europe,'' said Mr Swan in an Economics Note released yesterday.
"It's hitting the region's financial markets, unsettling businesses and consumers, and dampening trade. Obviously, this flows through to Government revenues, and will add to the $130 billion in revenue write-downs we've seen since the global financial crisis first struck.
"It will make the task of returning the Budget to surplus in 2012-13 a lot tougher, but we're determined to get there. The hit to Government revenues caused by the global turbulence means we'll have to continue making tough budget decisions.
"Maintaining our fiscal rigour is absolutely critical at a time when global financial markets are punishing those without discipline. One of Australia's great strengths is our very low level of public debt - it's less than a tenth of the average across major advanced economies.
"Our record of fiscal discipline helps underpin confidence in our economy and supports job creation. It also gives the Reserve Bank room to move on interest rates, as we saw earlier this month.'"
Nope.
If, as you say, the US market tanks considerably more in the future, the USD will actually gain ground against the A$.
A large enough US double-dip recession would bring down Asia and put downward pressure on commodity prices in the medium-term as we've already seen with iron ore in the last two months. Also the AUD is a speculative investment, and so US$ funds would withdraw from it in another credit crunch across the Atlantic.
In short, if you think there's a severe double-dip recession around the corner in US/Europe, the prudent move would be to sell the AUD, buy USD, hold and buy the AUD back when the recession happens, which would just be in time for your 100bps cut and 60c AUD/USD.
Have you ever noticed that whenever negative news comes out of the US/Europe, the AUD falls. And when positive news comes out, the AUD rises?
As mentioned by other posters, a 100bps will also put downward pressure on the AUD, while USD interest rates have already hit rock bottom so don't have much more to fall. Can't have it both ways guys - a low interest rate and high currency.
Do some peopel actually bveelvie evry stereotype they are presented ?
They aren't freaks, they are human beings capable of being as normal as .....you
FFS man tell me you're joking iwth your negative perception , surely you're
smarter than thatDo some peopel actually bveelvie evry stereotype they are presented ?
They aren't freaks, they are human beings capable of being as normal as .....you
FFS man tell me you're joking iwth your negative perception , surely you're
Not sure what you're on about jaycee (yet again). There's no negative connotation or innuendo in what I said. You're directing your high moral ground to the wrong person.
Ba'aaaaack on topic . . . .
It sounds like the RBA Board might be pouring cold water on the Dec rate cut enthusiasm. Which is hardly surprising, but certainly disappointing.
Not being too well-connected in the banking domain myself (to be honest, they've long-since stopped returning my phone calls), what are those within eavesdropping distance hearing?
Be interested to know.
It sounds like the RBA Board might be pouring cold water on the Dec rate cut enthusiasm. Which is hardly surprising, but certainly disappointing.
Not being too well-connected in the banking domain myself (to be honest, they've long-since stopped returning my phone calls), what are those within eavesdropping distance hearing?
Be interested to know.
Baa baa black sheep...have you got any wool.....no sir no sir....SNAP!!!....back to the topic....!!
You are correct.........back on topic...still think there is a 60-70% chance of cut in Dec.
Will probably only be 0.25%.....just to keep things ticking over Xmas!!
You are correct.........back on topic...still think there is a 60-70% chance of cut in Dec.
Will probably only be 0.25%.....just to keep things ticking over Xmas!!
I'm following the market and 100% certain we'll see a cut.
http://www.asx.com.au/sfe/targetratetracker.htm
http://www.asx.com.au/sfe/targetratetracker.htm
I'm following the market and 100% certain we'll see a cut.
http://www.asx.com.au/sfe/targetratetracker.htm
Don't think they'll go in December for the same reasons I didn't think they should have moved in November ..... and nice to hear rumours that at least one member of the Board agreed with me
As an aside, were they too move any time in the next, say, six months, you wouldn't want to bet on it being matched by too many finders.
Depends on what you read and who you talk too,but if the data sellers are on the mark about the downsize of several face to face Banking outlets in Australia early next year,then my guess is no change and upwards from now,or as some say if they learn anything from the past
means they didn't know anything before..
means they didn't know anything before..
2012? Already plenty of money at 5.99%
in 2009 you could get a 3 year fixed sub 6% which really wasnt that long ago.
https://www.commbroker.com.au/Net/D...cal-interest-rates/historical-fixed-rate.aspx
https://www.commbroker.com.au/Net/D...cal-interest-rates/historical-fixed-rate.aspx
Yep....I want something around....5.4-5.75% to make it attractive for me to fix.
Yes.....that was almost 3 years ago....hope to see well under 6 by April 2012.
Yes.....that was almost 3 years ago....hope to see well under 6 by April 2012.
3 years ago you could get something sub 5% ... I'm also looking mid to low 5's to make it viable.
As for a rate cut? Gut feeling is that there will be a small one because the next decision can't be made until Feb ... even with the Christmas leadup bricks and motar retail (major employer in Australia) is suffering real bad.
wait till it gets to mid 5's and then the greedy people will be waiting till it gets to mid 4's
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