rba cuts 0.25

[Aaron Sice]

i don't think property is going anywhere.

lending criteria is on the march, further and further away from your average joe.

i can't see this helping anyone 'pay more' or 'borrow more' or borrow money where they couldn't before.

if they couldn't borrow at 2.5%, then 2.25% (10%) is not going to make a difference.

when the RBA were cutting 7.25 - 4.25% over a period of a few months and 4.75% to 2.50% over a year - THAT was when we saw the lending markets change.

 

[Redom]

And I'd say there's been no need. If they're feeling the need to stimulate the economy (read: push more money into property) at this time, what happens when we do hit recession-town.

This view is one from people with a large bias towards housing.

In the real world:

• Wage growth is at its slowest in decades. While generally tied to longer term productivity indicators, this has an obvious impact on inflation.
  
• Unemployment is at decade highs.
  
• Business investment isn't picking up as fast as required to spur on employment growth.
  
• Forecasts for economic growth continue to deteriorate. Without growth, none of the above are getting any better (perhaps business investment can, given financing conditions are loose).
  
• Inflation is at the lower point of the band.

Just because the housing markets booming, it doesn't mean that monetary stimulus wouldn't provide much needed support to the economy.

The RBA have this hat on.

Inflation. Unemployment. Growth.

Not, 'house prices across Australia, so everyones smiling and making money'.

Until things pick up, the easing bias will continue, and so it should. Monetary policy is one of the main levers to support growth, and if financial stability can be kept under control through the process, then so it should. Reading the RBA's statement, its clear their very mindful of this too.

Ideally those with fiscal tools would be able to go through large scale infrastructure investment (large multipliers to growth, employment) - but that's not going to happen.

Cheers,
Redom

 

[jackbak]

And I'd say there's been no need. If they're feeling the need to stimulate the economy (read: push more money into property) at this time, what happens when we do hit recession-town.

You're contradicting yourself. If you believe a recession is only a matter of time, then there clearly has been and is a need for rate cuts. No point getting into a recession and saying "well at least we have all this room to move on rates", it's too late by that stage.

 

[Corey Batt]

You're contradicting yourself. If you believe a recession is only a matter of time, then there clearly has been and is a need for rate cuts. No point getting into a recession and saying "well at least we have all this room to move on rates", it's too late by that stage.

Difference in philosophy. The point isn't to try hold back the tide, but to mitigate the inevitable ravaging which takes place. The dead wood always needs to be flushed from the system, but there certainly is a point where you don't want efficient actors from being pushed out during the dip.

Unless you believe in complete deregulation of the monetary system.

 

[Biz]

Is that a graph of the excitement level of the forum as the decision was announced?

 

[Redom]

Is that a graph of the excitement level of the forum as the decision was announced?

Hahah quality.

 

[Aaron Sice]

Monetary policy is one of the main levers to support growth, and if financial stability can be kept under control through the process, then so it should.

Correction - it's the ONLY lever.

 

[kamchatsky]

The question though for me though, will the fix rate home loan interest rate go down further over next coming weeks? I am looking to fix IP home loan rates soon.

 

[jackbak]

Correction - it's the ONLY lever.

I'd say fiscal and trade policy can help with growth.

 

[Chomp]

Correction - it's the ONLY lever.

The media plays a massive part as well, I can see the patterns in it, they are being told when and what to print.

 

[Chomp]

And no I'm not John Nash, just to get ahead of a smart **S !

 

[Aaron Sice]

so the RBA have control over fiscal and trade policy? the media?

context please - no need to be a smart a.r.s.e.

 

[jackbak]

so the RBA have control over fiscal and trade policy? the media?

context please - no need to be a smart a.r.s.e.

You've lost me...

You said monetary policy the only lever to support growth. That's not true.

And pretty sure you're reply to Redom was along the "smart a.r.s.e." lines...

 

[Redom]

Plenty of ways to stimulate growth, monetary easing is one way to do it to have shorter run impacts.

Can simply spend more and tax less (fiscal), have structural adjustments (labour market reforms, competition, tax, trade, etc).

Although in today's political climate, it does seem like its the only available policy tool.

 

[HomeBuyAU]

remains to be seen how much banks pass on. Dont hold breath.

I doubt the banks will pass on the cut

 

[spludgey]

I doubt the banks will pass on the cut

My guess is 0.2%, which would be over $2k for me per year and about another $1k from November onwards (fixed rates running out).

 

[willair]

Is that a graph of the excitement level of the forum as the decision was announced?

Sorry should have posted it's ASX S@P/ASX200,Chart ,and just from the sidelines and it's not fair,but it's reality CBA is above the $90.00 mark and still tracking upwards,and with the low fixed term rates on offer,CBA may well break into the 100$ range..imho..

 

[oc1]

my guess is 0.2%, which would be over $2k for me per year and about another $1k from november onwards (fixed rates running out).

boq 0.25%.

 

[willair]

Plenty of ways to stimulate growth, monetary easing is one way to do it to have shorter run impacts.

Can simply spend more and tax less (fiscal), have structural adjustments (labour market reforms, competition, tax, trade, etc).
.

You can look at it in real simple terms,the economic growth that everyone wants is basically a yardstick of the number of workers and their productivity,even Warren Buffett has said many times every worldwide government can offer subsidized child care so more women can go back into the workforce,but when you have short term polarized government politics on both sides in Australia politics,something gotta give..imho..

 

[perthguy]

I doubt the banks will pass on the cut

Banks, maybe not but we should wait and see. Other lenders are already jumping in to pass on the full 0.25%

BANK of Queensland has jumped the gun on its major bank rivals and passed on to customers in-full the Reserve Bank?s cut to the official cash rate, citing hot competition to win borrowers.
...
Fellow small lender, ME Bank, will also pass through the 25-basis point cut in-full, taking its variable rate down to 5.13 per cent, effective February 20.

http://www.theaustralian.com.au/bus...kly-to-cut-rates/story-fn91wd6x-1227206555557

5.13% variable isn't a great deal. 4.59% for a 3 year fixed is more attractive today but that could all change in a week.