Dear Dave,
1. My corresponding comments are as per outlined below.
Cheers,
Kenneth KOH
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Comments:
1. Please give some time for the various global D&G issues to work itself fully through the Australian Economy and you will know that the Australian Economy is likely to slow down by itself, even without the RBA having to increase its interest rates.
2. As it is, the ASX has already lost 15% of its market value off its last market peak in Oct 2007. Corporate causualties are beginning to surface, such as the RAMS Homeloans, Centro Property Group, Allco Finance, Opes Prime etc.
3. To me, the RBA is more likely to "stall" the Australian Economy in the near future if it continues with its previous "hawkish" posturing by continuing to pro-actively and automatically increases its interest rate further "unneccessarily";- simply because the local inflation rate has merely exceeded its targetted 2%-3% figures by less than 1%.
Comments:
1. With or without all the recent interest rate increases by the RBA, I do not recall reading that inflation in Australia has actually exceeded 5%p.a to date, not to mention your 6%p.a annual inflation rate projection which is being presently referred to.
2. In other word, whether the RBA actually increases its interest rate or not, particularly in 2001, 2002, 2003, 2004, ( as well as in 2005, 2006, 2007 and during the first quarter of 2008), the local inflation rate in Australia, has always been hovering between 2%-4.5% pa. during all this while since 2000.
3. On hindsight, consequently, economically speaking, I personally believe that the Liberal Federal Govt was fully "justified" to allow the local Australian Economy to continue to expand further by itself through more new job creations and increase in local employment opportunities, by reducing its local unemployment rate to its lowest levels in history as well as to continue generating economic prosperity for Australia, without neccesarily generating a "run-a-way" inflation ill effects scenario for Australia during its past 2 office terms.
Comments:
1. Given the time lag for the various D&G issues to work through the Australian Economy, the initial pains have just begun to surface in Australia, as was recently felt by many local Australian housheholds, on the ground.
2. I personally think that it is still to early and pre-mature to make any valid conclusion at this point in time, regarding the full ill effects of the D&G issues on the Australian Economy.
1. My corresponding comments are as per outlined below.
Cheers,
Kenneth KOH
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With inflation coming through for the March quarter at 4.2%, I very much doubt we'll see downward movement in rates this year or even early next year. Clearly the Australian economy was still booming Jan-March, despite all the D&G. There has been no decrease in demand so far.
In fact, if inflation does not fall next quarter, there may even be another 0.25% hike. 4.2% is VERY high, well outside Steven's comfort zone. He must be very confident that inflation is on the way down to hold rates steady. He won't cut them unless inflation falls to 2% or lower I reckon.
Comments:
1. Please give some time for the various global D&G issues to work itself fully through the Australian Economy and you will know that the Australian Economy is likely to slow down by itself, even without the RBA having to increase its interest rates.
2. As it is, the ASX has already lost 15% of its market value off its last market peak in Oct 2007. Corporate causualties are beginning to surface, such as the RAMS Homeloans, Centro Property Group, Allco Finance, Opes Prime etc.
3. To me, the RBA is more likely to "stall" the Australian Economy in the near future if it continues with its previous "hawkish" posturing by continuing to pro-actively and automatically increases its interest rate further "unneccessarily";- simply because the local inflation rate has merely exceeded its targetted 2%-3% figures by less than 1%.
Kenneth, you can see that even with 3 quick rate increases, inflation is still very high. What might it have been if Stevens had followed your "natural" approach to constraining demand? 6%?
Comments:
1. With or without all the recent interest rate increases by the RBA, I do not recall reading that inflation in Australia has actually exceeded 5%p.a to date, not to mention your 6%p.a annual inflation rate projection which is being presently referred to.
2. In other word, whether the RBA actually increases its interest rate or not, particularly in 2001, 2002, 2003, 2004, ( as well as in 2005, 2006, 2007 and during the first quarter of 2008), the local inflation rate in Australia, has always been hovering between 2%-4.5% pa. during all this while since 2000.
3. On hindsight, consequently, economically speaking, I personally believe that the Liberal Federal Govt was fully "justified" to allow the local Australian Economy to continue to expand further by itself through more new job creations and increase in local employment opportunities, by reducing its local unemployment rate to its lowest levels in history as well as to continue generating economic prosperity for Australia, without neccesarily generating a "run-a-way" inflation ill effects scenario for Australia during its past 2 office terms.
Remember that while US mortgage defaults are very high at 3% of prime loans and over 10% of sub-prime, Australia's default rate on prime is 0.3%. It's higher than last year, but still very low overall. There's not been much pain here yet, and that's reflected in continuing robust demand.
Comments:
1. Given the time lag for the various D&G issues to work through the Australian Economy, the initial pains have just begun to surface in Australia, as was recently felt by many local Australian housheholds, on the ground.
2. I personally think that it is still to early and pre-mature to make any valid conclusion at this point in time, regarding the full ill effects of the D&G issues on the Australian Economy.
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