Im jumpy about cut backs and slow downs at silver, lead and zinc mines in Aus. Despite whats happening with coal and iron ore it could be interpreted (probably wrongly) as a more general slow down in the commodities boom.
What do you think - Interest rates may have peaked
- Thread starter TheAnalyst
- Start date
Im jumpy about cut backs and slow downs at silver, lead and zinc mines in Aus. Despite whats happening with coal and iron ore it could be interpreted (probably wrongly) as a more general slow down in the commodities boom.
Wouldn't the Reserve look at the hard evidence that is before it - now - that inflation is getting out of control, and do something about it?
Or would it prefer to crystal ball gaze that there - might - be a slow down in the economy, and ignore the hard evidence on inflation.
Seems that everyone thinks they will do the later.
Look I agree with you. Inflation is a real problem.
The thing is - I have lost my confidence in the willingness of the RBA to make hard, politically unpopular decisions. They should keep rates on hold but I am questioning whether they have the balls to do it.
And I think the Australian economy can absorb a single 0.25% cut without stoking inflation in a meaningful way. Everyone wins - the RBA look like heroes and inflation keeps trucking along in the background without leaping off the charts.
I am still very bearish on the longer term and just cannot see inflation easing late 2009 / 2010 as the RBA predicts - I think they have it wrong.
I know this will be a very unpopular statement but I also believe that the credit crisis will be forgotten by late 2009 - we just need 2 good reporting seasons for people to be convinced that there are no more skeletons in the closet.
The thing is - I have lost my confidence in the willingness of the RBA to make hard, politically unpopular decisions. They should keep rates on hold but I am questioning whether they have the balls to do it.
And I think the Australian economy can absorb a single 0.25% cut without stoking inflation in a meaningful way. Everyone wins - the RBA look like heroes and inflation keeps trucking along in the background without leaping off the charts.
I am still very bearish on the longer term and just cannot see inflation easing late 2009 / 2010 as the RBA predicts - I think they have it wrong.
I know this will be a very unpopular statement but I also believe that the credit crisis will be forgotten by late 2009 - we just need 2 good reporting seasons for people to be convinced that there are no more skeletons in the closet.
Inflation needs to be contained - an economy in the grip of the inflation genie is much worse than a few investors who cant pay their bills. The reserve needs to do its job and stop trying to please everyone.
It wont be the end of the world.
Thats a different stance to saying that rates will go down.
I see where you are coming from
Hi Oldjonesy,
It is interesting to read your posts here. Your posts make me think that the propganda on the blog or forums by those web police employed by the Chinese government to influence the audience on the internet.
Are you employed by RBA to give messages here? If it were, I felt shamed about you.
I can not find any of your posts are not for that purpose.
So because I do not subscribe to the politically correct view about rates coming down, and offer my opinion as to why the reserve should not decrease rates, I am suddenly a spy under the employ of the RBA?
Grow up
Exactly.
Since when has China ever worried about the average person on a micro basis?
This is all a publicity stunt because they have allowed the world into their livingroom for 2 weeks, so they are on their best behaviour temporarily.
The Greater Good of the Economy is far more important to the average Chinese Pollie/Army Dictator.
Off topic; did you here about the two grannies being basically under house arrest for trying to apply for protest permits during the Games?
One more incident and they could be hauled off to labour camps - they are 77 and 79 years old.
You are not stating your views. You mainly use Boomtown's view to talk. That is my worries. If you gave your own views, eveyone here would be happy to listen. Does not matter the ups or downs.
why would the RBA not have the balls to make unpopular choices? unpopular to who? the general public? why would they be concerned if the public thought unfabourably of them?
This is the part i dont get with why there would be a IR cut... ok stats show there is a dip in annual rate, on the flip side quarterly CPI figures have still gone up? why should this be ignored?
Fair enough the resource boom has plateaued abit..but
Cant agree with that comment more....
Add to that - im guessing things will get more interesting, once india gets its **** into gear (ok that might not be tomorrow)..
Apologies for the long list of questions!!
Cheers
This is the part i dont get with why there would be a IR cut... ok stats show there is a dip in annual rate, on the flip side quarterly CPI figures have still gone up? why should this be ignored?
Fair enough the resource boom has plateaued abit..but
Cant agree with that comment more....
Add to that - im guessing things will get more interesting, once india gets its **** into gear (ok that might not be tomorrow)..
Apologies for the long list of questions!!
Cheers
1. Financial markets dont like surprises. If there is no cut 1 Sept it will be a "surprise" (even though the markets have completely overreacted to what the RBA has said.
2. The RBA governors are also humans and do have some compassion for whats going on in Western Sydney. They may genuinely believe that the country can "afford" a rate cut or that it is justified.
2. The RBA governors are also humans and do have some compassion for whats going on in Western Sydney. They may genuinely believe that the country can "afford" a rate cut or that it is justified.
I reckon you are highly educated on the theory but forget about the reality.
In my view, if you come to this forum to learn something. I reckon it is best time to buy property. I just see so many great opportunites there now than ever. It may help you make some money than what you learnt from your uni.
In all honesty i dont understand much of economic theory, which is why ive asked those questions..
i would of thought the questions ive asked are based on 'reality' eg quarterly cpi movments for one.. why is this being shunned in light of the annualised figure?
speaking to a broker.. IR's dropping because cost of funds more or less going down. Ok accept that. But from RBA's view.. (ignoring popular/unpopular decision making dilemmas).. why cut IR's? Ok people are backing off from buying plasmas and ipods and iphones.. so then we see a drop in retail spending.. but to me, this was a combined result of a over committed folks, a few IR's going up, and Petrol Hikes (thanks Fuelwatch LOL)..and all that took a couple of years to happen.
at the end of the day.. i think the economy is still doing bloody well? well.. in truth i think theres 2 extremes of the Oz economy right now(resources, & everyone else).. with one side winning pulling the results more their way..
ive seen alot of talk about it dropping.. but im looking at various stats and cant put the two and two together.. maybe because im not looking at the right stats, or the bigger picture.. whatever the case maybe, it would be good if someone can help correct my understanding.
Cheers.
ps. just for the record.. ive been looking to buy for the last 2 months with the aim to do so in the next 6mths.. is this the right decision? nfi.. leave that for another thread..
i would of thought the questions ive asked are based on 'reality' eg quarterly cpi movments for one.. why is this being shunned in light of the annualised figure?
speaking to a broker.. IR's dropping because cost of funds more or less going down. Ok accept that. But from RBA's view.. (ignoring popular/unpopular decision making dilemmas).. why cut IR's? Ok people are backing off from buying plasmas and ipods and iphones.. so then we see a drop in retail spending.. but to me, this was a combined result of a over committed folks, a few IR's going up, and Petrol Hikes (thanks Fuelwatch LOL)..and all that took a couple of years to happen.
at the end of the day.. i think the economy is still doing bloody well? well.. in truth i think theres 2 extremes of the Oz economy right now(resources, & everyone else).. with one side winning pulling the results more their way..
ive seen alot of talk about it dropping.. but im looking at various stats and cant put the two and two together.. maybe because im not looking at the right stats, or the bigger picture.. whatever the case maybe, it would be good if someone can help correct my understanding.
Cheers.
ps. just for the record.. ive been looking to buy for the last 2 months with the aim to do so in the next 6mths.. is this the right decision? nfi.. leave that for another thread..
Skuzy,
The RBAs primary mandate is to keep inflation in the 2-3% band. Their secondary, and not explicitly stated, one is to keep the economy ticking along nicely. Now that all the "lead" indicators suggest inflation is under control then they can start easing interest rates so that they uphold their secondary obligation to stop the economy falling in a heap. In time, the lag indicators will show that inflation is under control and in fact that they might have waited too long to start easing.
The deputy governor himself pretty much made this argument recently. If they waited for inflation to actually fall back inside the band then they would be way too late in easing. They acted pro-actively in advance of rising inflation and raised and will act pro-actively in advance of falling inflation and ease. Its a tough gig being a reserve bank as everyone has the benefit of ridiculing you with perfect 20/20 hindsight whilst you have to act in a world of uncertainty predicting the environment 12-18 months ahead. A very tough gig...
I reckon it will be 1-1.5% of ease over the next couple of years.
Cheers,
Michael
The RBAs primary mandate is to keep inflation in the 2-3% band. Their secondary, and not explicitly stated, one is to keep the economy ticking along nicely. Now that all the "lead" indicators suggest inflation is under control then they can start easing interest rates so that they uphold their secondary obligation to stop the economy falling in a heap. In time, the lag indicators will show that inflation is under control and in fact that they might have waited too long to start easing.
The deputy governor himself pretty much made this argument recently. If they waited for inflation to actually fall back inside the band then they would be way too late in easing. They acted pro-actively in advance of rising inflation and raised and will act pro-actively in advance of falling inflation and ease. Its a tough gig being a reserve bank as everyone has the benefit of ridiculing you with perfect 20/20 hindsight whilst you have to act in a world of uncertainty predicting the environment 12-18 months ahead. A very tough gig...
I reckon it will be 1-1.5% of ease over the next couple of years.
Cheers,
Michael
RBA cut 0.25%
Unfortunately, The RBA has only cut 0.25%. Disappointing...
Unfortunately, The RBA has only cut 0.25%. Disappointing...
C'mon, seriously?
IMHO it was never going to be more than 25bp as I posted in that other thread. This is still an excellent outcome and signals clearly that we're at the top of the rate cycle.
Wake up, its 9 o'clock!
http://www.quartile.com.au/Market Data/propertyclock.htm
10 o'clock looks kinda nice don't you reckon...
Cheers,
Michael
PS I'm never disappointed when there's a beer bet on it either...
It is the beginning! No time to be disappointed. There will be another if not next month, then the month after. It's been time to buy for a while now as I said...good times ahead.
Regards JO
