What do you think the Reserve Bank will do with interest rates March 01 2005?

[Bill.L]

Hi all,

I'm just trying to get in first, by saying that it is now official. We have had a 0.25% increase.

bye

 

[Jamie]

Reserve Bank increases rates 25 basis points to a cash target of 5.5%

http://www.rba.gov.au/

Jamie.

 

[buzzlightyear]

Their bluffing.....no rise in March....

Damn, they called my bluff.

http://www.rba.gov.au/MediaReleases/2005/mr_05_04.html

There is no mention made of the $A in this release. If strong commodity prices are one area where the RBA is a positive for the economy, the strong $A mitigates any increase in commodity prices. Hardly great news for our exporting industries & tourist industries.

 

[Baloo]

Quiggles,
The RBA must be very brave increasing interest rates right now
as there is no real reason for it and because it will have a significant negative
affect on the housing market and on our trade deficit which has now started
ringing alarm bells.

I'll be the first to admit that I have no real understanding of the world of economics, but what I have seen over the years makes me trust the RBA. I don't remember them poutting too much of a foot wrong.

A year ago when the started to raise the rates there was a lot of moaning about how it is unwarranted, too early and would be counterproductive. In hindsight, their move was timed nicely and had the desired effect on the market.

Until they are proven wrong, I'm happy to sit back and believe that the RBA really do know what they are doing. It may not be ideal for my investment goals right now, but in the long run a more stable economy will yield better reults for me.

 

[always_learning]

Up they go by 0.25%

At its meeting on 1 March, the Reserve Bank Board decided to increase the cash rate target by 25 basis points, to 5.5 per cent.
Statement by the Governor, Mr Ian Macfarlane: Monetary Policy

Here is the press release:

STATEMENT BY THE GOVERNOR, MR IAN MACFARLANE
MONETARY POLICY​

Following a decision taken by the Board at its meeting yesterday, the Bank will be operating in the money market this morning to increase the cash rate by 25 basis points, to 5.5 per cent.

For some time the Bank has been signalling that the cash rate would probably need to be moved higher during the current expansion. The decision to do so in March took into account the following main considerations:

• The Australian economy is now in the fourteenth year of an expansion which has made substantial inroads into the economy's surplus productive capacity. Over recent months, it has become increasingly clear that remaining spare capacity in the labour and goods markets is becoming rather limited.
  
• This is now starting to result in stronger inflationary pressures. Price increases at the producer level picked up appreciably at all stages of production during the second half of 2004. Consumer price inflation, although currently consistent with the target, was higher than had been expected, and is forecast to increase to around 3 per cent by the end of next year. Continued pressure on raw materials prices, constraints on capacity and reports of higher employment costs – notwithstanding the steadiness to date of aggregate wage measures – constitute a risk that this forecast will prove to be too low.
  
• Although Australia's GDP slowed during 2004, this does not appear to have reflected any deficiency in domestic or global demand. Domestic spending has been growing strongly for some time and the global economy last year grew at its fastest pace in more than a decade.
  
• Conditions prevailing in Australia and abroad are likely to continue to encourage spending growth in the period ahead. The world economy is growing at a faster-than-average pace and world commodity prices are rising. In Australia, there are high levels of confidence in both the business and household sectors, credit growth is providing ample support for spending, employment is growing strongly and national income and spending will continue to be boosted this year by the rising terms of trade.

In these circumstances, the Board judged that an increase in the cash rate was warranted in order to reduce the risk of an unacceptable rise in inflation in the medium term.

 

[plainsong]

The Ninemsn page has a poll this morning..
Will you be hurt by increased interest rates?

so far 1338 think they will, 1169 think not.

Be interesting to see what they say by pm.

 

[BV]

Oh well, I was going to increase my rents by 5% anyway.
I guess this interest rate increase shouldn't suprice me because
its not really the RBA's responsibility to manage the value of our $
and our current account deficit.
Lets see how the government will deal with these problems now....
cheers