Seems like rates will stay at record low for longer than we predict

Discussion in 'Property Market Economics' started by sumterrence, 6th May, 2015.

  1. sumterrence

    sumterrence Member

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  2. unloadmymind

    unloadmymind Member

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    Yeah.

    The Mining Boom is over.

    So no reason to raise rates anytime soon.
     
  3. Aaron Sice

    Aaron Sice Seldom Seen Kid

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    actually, the mining boom is over, but it's one phase in a three-phase super-cycle.

    and of course, just because China slowed a bit - and all Australia's eggs were in that basket - doesn't mean the emerging markets in India, Pakistan, Vietnam, Central Africa, Brazil, Colombia, Peru, Argentine etc have all just gone away.

    i know Aussies hate it, but we might just have to work harder.
     
  4. C-mac

    C-mac Member

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    Aaron I've been reading about this 3-phase mining boom (its been getting a lot of media coverage of late). I still have my doubts. I feel like the PR departments of many mining companies have just been pumping out media releases to the usual newspaper/news site 'traps' to try and stimulate some good spin for themselves.

    Why? Just about every other global business source is downplaying dirty coal and any other kind of dirty energy (and yes, that includes natural gas which is far more detrimental than coal! Just watch the 'years of living dangerously' coco DVD series that deep dives into the science of natural gas, if you don't believe me!), so they are hedging their bets (and increasing investment interest) into renewables.

    I'm stumped as to why AUS has not explored the renewables sector further and developed this industry to at least try and pick up some revenues off the back of the mining slump!

    Anyway, I personally can't see phases #2 and #3 of the mining boom pick the economy up with enough momentum / gusto in the coming 13 years, to make up for the dire shortfalls Australia's public and private purses will have :/
     
  5. ej89

    ej89 Member

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    Well good old Dymphna Butthole was saying china will be increasing their car manufacturing by 10% and need our iron and coal... haha not sure where she got her numbers from though..
     
  6. sumterrence

    sumterrence Member

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  7. Deltaberry

    Deltaberry Member

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    India is a long way from booming in any shape or form like China did though.
     
  8. windyzz

    windyzz Member

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  9. citystar

    citystar Member

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    I won't pretend to understand how and what affects interest rate changes however I am loving the low rates at the moment. As a child I remember Mum & Dad were paying over 18% on the home loan and it was a struggle for all of us.
     
  10. Deltaberry

    Deltaberry Member

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    Put it this way.

    Low rates and high unemployment is better than high rates and high unemployment.
     
  11. unloadmymind

    unloadmymind Member

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    Th RBA just downgraded their GDP and inflation forecasts.

    There's more room for cuts!!!
     
  12. BayView

    BayView Member

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    On the unemployment (and business climate)...

    Correct me if I'm wrong, but you would reckon that if the rates are so low, and getting lower, that businesses would start to borrow more for various improvements and redevelopment, extensions, expansions and so forth - which you expect would all lead to more jobs...

    Yet; unemployment is still up, and not going down anytime soon.

    What does that tell you?
     
  13. Angel

    Angel Member

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    Unemployment is still low compared to previous periods in recent history.

    Don't shoot me, I'm looking for a positive spin.
     
  14. unloadmymind

    unloadmymind Member

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    main take aways from the latest RBA quartely Statement on Monetary Policy which formed the basis of the rate cut:

    - GDP growth was downgraded from their last forecast in Feb
    - Unemployment will remain elevated for longer than expected
    - Inflation was also downgraded from last forecast

    From these, the Bank implicitly has maintained an easing bias, watching for signs of further weakness before cutting rates further.

    They are hoping household spending will carry the baton, but this will depend much on confidence of consumers spending and dipping into their savings. Mining investment is falling, while non-mining investment is expected to be subdued.

    Conversely from these latest forecasts by the RBA, there is virtually almost zero chance of raising rates in the next couple of years.
     
  15. unloadmymind

    unloadmymind Member

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    The working population is growing faster than what these new business investment can create jobs.
     
  16. lilman

    lilman Member

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    Australia the future greece of Asia?
     
  17. unloadmymind

    unloadmymind Member

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    No!!!

    The RBA is 90% confident we will not have a recession in the next couple of years.

    It's a soft growth story:

    [​IMG]

    Inflation is within the comfort zone (no need to raise rates soon):

    [​IMG]

    Unemployment still above GFC levels:

    [​IMG]
     
  18. Deltaberry

    Deltaberry Member

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    It tells you that people are still by and large uninnovative, lazy and have no confidence to take risk.

    Changing rates doesn't change how innovative or productive a country is. It's merely a facilitator of money supply and money velocity (sorry too academic here), given you already have a productivity base.

    Otherwise Africa would solve poverty with 0% interest rates or by printing lots of money and giving everyone gazillion dollars.

    Who knows... maybe that'll change, but a country's prosperity starts with its people and what they do, not with this artificial thing called money (ie pieces of paper) or how much it costs to get this paper.

    I don't like being academic about these things. But the world is very simple. If you produce something people want, you will be rich. If you add no value, you are as good as garbage. Artificially changing interest rates or adjusting money supply doesn't change the fact that you either are or you aren't producing something people want.
     
  19. Waldo

    Waldo Rock Analyst

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    And that is meant to be good?!?!
     
  20. unloadmymind

    unloadmymind Member

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    Good for those who keep their jobs and take advantage of the low interest rates. :)