High inflation continues:
http://business.smh.com.au/business/rate-relief-hopes-dashed-20080723-3jn1.html
http://business.smh.com.au/business/rate-relief-hopes-dashed-20080723-3jn1.html
Rate relief hopes dashed
- Thread starter twobobsworth
- Start date
So you don't understand about the seasonal adjustment that the RBA does then? Because petrol/diesel is included in the inflation figures then of course inflation is well up on last year but do you know what drives world oil prices? Oil is always more expensive in our Winter months because of the US summer holidays. So we can expect the inflation figure to drop in coming months and then guess what, the RBA will be happy that inflation has been controlled properly.
Not sure about interest rates after that but there will be more downward pressure than anything.
Gools
Hold on, so the CPI jumped because the banks raised their margins, therefore the rba cant reduce their rates.
It was only yesterday that I read that the rba need to lower their rates because the banks raised their rates and there is fear of a harder landing.
A days a long time in finance
It was only yesterday that I read that the rba need to lower their rates because the banks raised their rates and there is fear of a harder landing.
A days a long time in finance
That's a big call! The quarter is up 1.5% instead of 1.3% expected. Food actually dropped in price. Most of the increase was in rents (just where I like to see it...
), oil price (now dropping) and financing margins (are spreads going to continue rising?). Not exactly seismic stuff is it? Plenty of scope for the RBA to sit tight, especially if oil sits around $120/bbl going forward which is likely given the reduction in domestic fuel price subsidies around the world (esp China) and the end of the US driving season. I don't think the wheels are going to fall off just yet...
Great! It gives me more time to get ready for the next upswing.
Yes I really must sell up everything now to get me some of that 3.5% differential between savings account rates and inflation! Wow! Think of what I'm missing out on...
You do make me laugh sometimes HG! Some reward...
Would be nice if we had one or two more rate rises by end of year. Confidence in the housing market has hit hard, so a few more rate rises will really bring out those bargains. Even my broker is freaking out due to the lack of new loans he is issuing.
Hi HG,
Wow... you're only getting 8% interest from the bank... how's that working out for you with inflation running at 4.5%. I assume you're paying tax on that interest too... can't be much left after tax and inflation? What a business!
Landlords 'rent money' from the bank, but the costs are mostly covered by the tenant and the ATO.
And since interest rates have peaked, it's only going to get better for the landlord, and worse for the 'saver'.
Shadow.
That's a big call! The quarter is up 1.5% instead of 1.3% expected. Food actually dropped in price. Most of the increase was in rents (just where I like to see it...
http://www.abs.gov.au/ausstats/[email protected]/mf/6401.0?OpenDocument
Thats 5.2% annualised excluding housing and finance costs. That *is* seismic stuff. Particularly when it hikes again for the October quarter. Ill concede some moderation for falling fuel prices but the salary hikes which kick in from the start of FY08/09 will drive producers to raise their prices. All in all we are dipping our toes into a nice little wage price spiral.
I am quite looking forward to capital gains++ this year, driven in part by spiralling inflation.
Boring...
Another one of those how to take a non-event outcome and try and turn it into a story.
Ah well, no news is good news on the rate front I suppose.
http://www.news.com.au/business/story/0,27753,24064769-31037,00.html
Watch this space...
Cheers,
Michael
Another one of those how to take a non-event outcome and try and turn it into a story.
Ah well, no news is good news on the rate front I suppose.
http://www.news.com.au/business/story/0,27753,24064769-31037,00.html
That about sums it up. Everyone knew this was going to be a high result, including the RBA. They'll keep rates on hold and I still think their next move will be down.news.com.au said:
Watch this space...
Cheers,
Michael
Hi BT
I must be missing something - I read 3.3% for the year from All Groups excluding housing and finance costs from that link. Which sort of makes sense as housing and finance were the main contributors to the number this time around.
Have I got it wrong?
We are both right - we are talking about 2 different things.
You are talking about a rolling one year average - which is coming off a comparatively low base. I just multiplied the current quarterly figure (1.3%) x 4 to give an annualised result of 5.2%.
In effect I am saying the rolling 1 year average is not relevant because the economy has changed so much since mid 2007 so we should disregard the figures for 2007. But the press will focus on the rolling average and say "its not so bad - this is a one off etc". But I think its reflective of an underlying shift in the economy and is not a 'one off. And we will find that out by December.
I am waiting for the Reserve Bank Govenor to use the word "entrenched". Im betting he will use it before November. As soon as he says it the Aussie dollar will then jump (again) and the ASX will slump (again).
You are talking about a rolling one year average - which is coming off a comparatively low base. I just multiplied the current quarterly figure (1.3%) x 4 to give an annualised result of 5.2%.
In effect I am saying the rolling 1 year average is not relevant because the economy has changed so much since mid 2007 so we should disregard the figures for 2007. But the press will focus on the rolling average and say "its not so bad - this is a one off etc". But I think its reflective of an underlying shift in the economy and is not a 'one off. And we will find that out by December.
I am waiting for the Reserve Bank Govenor to use the word "entrenched". Im betting he will use it before November. As soon as he says it the Aussie dollar will then jump (again) and the ASX will slump (again).
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I think you are right, no news is the appropriate term. The AU$ was also unchanged on the news (even if the market expected a 1.3% increase).
What the RBA is monitoring closely is the economic situation and number like the loan approval in the first place then the retail sales, unemployment, inflation and trade deficit with less importance for the moment.
what is sure is that the RBA inflation forecast in the recent past were rubbish
$100k cash @ 9% (although offhand I've only seen 8.5%)
Inflation @ 4% (although apparently it's more at the moment)
Income Tax @ 15% (very conservative I'd say)
After 1yr:
$109,000
- $1,350 tax on profit
= $107,650
less inflation = return of $3,650 for $100k invested for 1yr.
Quick, someone post the number for ING!!
Inflation @ 4% (although apparently it's more at the moment)
Income Tax @ 15% (very conservative I'd say)
After 1yr:
$109,000
- $1,350 tax on profit
= $107,650
less inflation = return of $3,650 for $100k invested for 1yr.
Quick, someone post the number for ING!!
Well, if you have 1,000,000 you get 36500 $ and you preserve the capital, then you can be homeless and go away around the world for few years living on that
I would've thought oil should be seasonally higher in the NH Winter - i.e. our summer due to the fact that a lot of oil is used for heating... in summer, its more of gasoline prices that go up due to the driving season...
well, that didn't take long. was only monday people were talking about a rate cut in november.
i don't see ratess coming down any time soon, considering we are at the 50y average interest rate.
i could always be like that knob on TT and "bet my house on it"...
i don't see ratess coming down any time soon, considering we are at the 50y average interest rate.
i could always be like that knob on TT and "bet my house on it"...
