Reserve bank plays the blame game?

[Philby]

Hope this is of interest
http://www.theage.com.au/articles/2003/04/03/1048962880091.html

 

[bkw319]

It's the old well worn trick of talking down property investment to try to cool things off a little without the need to actually raise interest rates.

 

[Philby]

Originally posted by bkw319
It's the old well worn trick of talking down property investment to try to cool things off a little without the need to actually raise interest rates.

Hope ytour right BKW319, they can keep trash talking, if its going to keep rates down.

 

[Michael Croft]

Hi,

The Reserve Bank is between the classic 'rock and hard place'. Household debt at record levels and a weakening economy.

What to do? Drop rates and stimulate the economy and risk an expansion of household debt, raise rates and reduce household debt by default (literally), or keep rates on hold and see what pans out? What would you do? Guess what they are doing - playing the 'wait and see' game whilst trying to talk down household debt.

We are currently living in a time of economic nirvana as far as inflation is concerned. The inflation demon is firmly in the bottle as they debate an insignificant 0.25% change in the base rate! Mind you if a 0.25% potential change in interest rates has investors worried that should be ringing alarm bells loud and clear. Cast your minds back a few years (less than 10) and remember that 1 to 2% changes in the base rate were the order of the day.

Can investors today cope with a 2% change in rates? If not why not? Speaks voumes to me if they can't.

Regards, Michael Croft