Aceyducey said:
RBA policy is to not change interest rates during an election campaign or for the month afterwards.
There's no reason at this time for the RBA to change this policy & I can't see either party advocating a change.
So expect a couple more neutral announcements.
The next likely opportunity for the RBA to modify interest rates is in December.
And the RBA doesn't meet in January....
So there's a strong possibility that unless there are majorly bad or good economic results that there will be no movement in interest rates until February next year at earliest.
Cheers,
Aceyducey
Hi Acey
I disagree with your point on next Feb. I vote December and even November.
WHY
1. OK we all accept this political waffle about “I will not let rates rise if in Gov” is nonsense. The RBA makes the call and IMO they are a lot smarter, independent, and savvier than their boring image implies. Example: how many times have they bought the Aus $$ and made a killing on the exchange rates? Many!
2. The RBA has consistently taken a long term view as to managing the economy. Example: When they raised rates in Nov and Dec 2003 self interest groups (Builders, Retailers, etc.) cried "the sky will fall". We were told by “experts” the market will crash, the dollar will surge to $1 US (I remember all the posts on the forum, myself included, regarding the 80 US cents and climbing Aussie dollar), our exports sector would die?
What happened?
Whilst you could literally sell a 1 Bed Shack in Woop Woop, sight unseen, in Sept 2003 to IP investors with negative gearing in their wallet and CG in their eyes, not here in Sept 2004 but there has been no crash, no forced sales, no builders without work.
The RBA has since been proven by economic data to have taken the right call, retaining a good balance between insurance again overheating, acceptable growth and a measured slowdown in property. On the dollar the RBA toughed it out and we are back around 70 cents.
3. Everything IS good at the moment. Growth is strong, unemployment is weak, even the high petrol price has not stopping us buying cars at record levels. Consumer Confidence is at all time highs according to reports. Confidence equals spending and the RBA wants to slow it.
4. Bang for your Buck (or in this case max gain for the pain).
Why raise in February? It is too late. By then we will all have maxed out our credits cards on Christmas presents, parties, annual holidays, etc, sucking more imports and more consumer debt. “The horse has bolted” as the saying goes.
But November…… before many holidays are booked, presents acquired, summer renovations planned, and well before the supposed, post Christmas Sales splurge, is the best time to remind Australia the RBA can and will use rates to control our spending, if we will not.
5. They did it last time and nothing is better than all the media gloom and doom from a double punch in November and December when people are just reaching into their wallets to spend. Retail spending over this period outstrips the rest of the year so “hit em when it hurts most” should be their approach.
6. By going in November the RBA will also reinforce their independence to the new Government. What better way to say “regardless of what you said in the campaign, don’t forget, we are in charge”.
7. They cannot lose politically! If the Liberals are back they will say “bad RBA, mean RBA” but secretly be thinking “who cares, 3 more years baby!” It Labour is back they will say “it is the Libs fault, we just got here”
8. Too many reports and comments that all is well (REA and Property Seminar Promoters), possible rate drops (as predicated by some economist in Zambia), more CG for all (based on 10 year buy and hold). RBA will want to kill any unrealistic revival.
So there is my theory of why a December and even November rise is on the cards.
I await the replies, Peter 147
