Will Interest Rates in 08 still ..er.. Fall?

[GIDDO]

It seems that most commentators agree that Oz will experience lower growth now, and higher unemployment.

This morning I heard a report on the radio indicating (source -IMF I think) that interest rates may need to RISE, not fall, because of the chance of increased inflation. Building materials in particular were mentioned as likely to rise in price.

I thought that with low growth the reserve would be more likely to lower rates.

Do other s'softers still think we will get another rate drop in October or November?

 

[craigb]

i think they will go down and our rudders face will be right in front of the news when it does.

 

[pendo]

Its the two speed economy at work.

Resource exports in AU are expected to increase by 48% to $178 billion.

source: Australian Bureau of Agricultural and Resource Economics (ABARE) released its September quarter commodities report on Monday.

 

[GIDDO]

Thank you for your replies.

So if the Interest Rates fall by HALF a PERCENT over the next six months, will the first home buyers be back in the market?

Or will we need to wait till interest rates are roughly equal to rental returns?

My interest rate is now 8.8%.

My yields are about 5.6%.

Bittofagap!

What do others think.

 

[marg4000]

My guess?

One more official .25% drop this year, but the banks won't pass it all on. If the banks don't pass on any of it, then just maybe another .25% is possible.
Marg

 

[boomtown]

Im calling 0.25 drop in October. Maybe more to follow. We are still in restrictive monetary policy territory and things are just too ****ed at the moment to worry too much about inflation.

And no one listens to the IMF anyway.

 

[Aaron Sice]

i don't think the IMF listen to the IMF - judging by the number of quarterly contradictions - sorry, i mean reports, they put out...

how will unemployment rise?

we need people in WA and QLD REAL bad just to sweep floors, hold lollipop signs and clean toilets...

 

[boomtown]

how will unemployment rise?

we need people in WA and QLD REAL bad just to sweep floors, hold lollipop signs and clean toilets...

Because they are too busy sitting in Western Sydney complaining about the downturn in their floral wrap business.

 

[WinstonWolfe]

I think the whole concept of central banks playing with rates is antiquated.
Ron Paul and Jim Rogers reckon they should just be abandoned. And I agree with their rationale.

The RBA have been ranting about cpi going up and having to raise rates to throttle that. In reality, cpi was going up due to the cost of imported oil pharmaceuticals and credit, and an undersupply of accomodation.

The RBA put up rates because central banks have been increasing M3 beyond GDP, thereby devaluing currencies and flooding developed nations with cheap credit.

The global property boom has been possible only because of cheap credit...and cheap credit has come from an increase in M3.

 

[boomtown]

Whats the link between central banks and an increase in M3?

 

[WinstonWolfe]

Whats the link between central banks and an increase in M3?

http://en.wikipedia.org/wiki/Money_supply

 

[boomtown]

Nevermind I was thinking M3 was the delta between M3 and M2. But it includes M2.

 

[Aaron Sice]

Because they are too busy sitting in Western Sydney complaining about the downturn in their floral wrap business.

gold.....!

 

[WinstonWolfe]

Because they are too busy sitting in Western Sydney complaining about the downturn in their floral wrap business.

nah, that's not it. ever tried to find a skinny flat white or mosque in a mining town?

 

[GIDDO]

Nevermind I was thinking M3 was the delta between M3 and M2. But it includes M2.

I got booked for driving 115 on the M1.

 

[boomtown]

Did you happen to be driving an M3 at the time?

 

[GIDDO]

Did you happen to be driving an M3 at the time?

Very good Boomtown!

 

[Aaron Sice]

a lot of people i'm speaking to (that is, in proprtty investing / developing) are expecting a cut either Oct 7 or November.

they're pretty big players with a lot of money on the table, so i dunno if it's just putting the idea out to the universe (secret style), a hope and a prayer, or sound financial advice.

 

[Ausprop]

a lot of the big players are only big because they have ridden the back of a multi decade asset inflation period. wil be interesting to see who can adapt and manage to grow in a period of asset deflation