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Official RBA cash rate chopped again today by .25%

 

Now it is 3%.

 

The lowest rate for the past 50 or so years.

 

Some of the smarty pants economists are predicting the rate to lower to 1 to 2 % by years end.

 

Dammmmmmmit!

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Official RBA cash rate chopped again today by .25%

 

Now it is 3%.

 

The lowest rate for the past 50 or so years.

 

Some of the smarty pants economists are predicting the rate to lower to 1 to 2 % by years end.

 

Dammmmmmmit!

 

Most economists were predicting the rate to stay the same this time but it was a token effort to round it off to 3%. There may be some economists predicting further rate cuts but they would be in the minority.

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breakfast
Most economists were predicting the rate to stay the same this time but it was a token effort to round it off to 3%. There may be some economists predicting further rate cuts but they would be in the minority.

 

Australia is said to lag the US in economic outcomes, good and bad.

 

There is still room to cut the rate further, and further it may go.

 

I find the Rudd adminstration's policy of handouts repugnant, as they will have to be repaid, in cutbacks, devaluation or taxes.

 

In my present view, a government has only a limited number of ways of paying for its pledges:

 

Borrow (eg issue bonds)

 

Save (cutbacks)

 

Steal (raise taxes) OR devalue the currency (eg by inflation of the monetary base)

 

Rudd will have to pay, or his successor, ultimately.

 

What better way to shut up the masses and make yourself popular in the process by giving away free money.

 

What a fool, in my opinion. Time will out him.

 

I remember being taxed 45% on a paltry 70K. I went part time as it simply wasnt worth it to work. This policy KILLS productivity.

 

Freezing wage growth and inflation lead to "bracket creep". But the wages don't go up in tandem with inflation. An old trick.

 

He is scum and I loathe him.

Edited by breakfast
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I expect the AUD to start weakening again if the central should lower rates. When is the next meeting?

 

/

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I 2nd the motion breakfast.

 

KRudd & Co are by far the worst Aust has had to suffer.

 

"Giving" away taxpayers money to stimulate the economy? by allowing taxpayers to spend their own money? on mostly foreign owned crap? WTF?

 

Not all who receive the 900 bucks are the ones who earned it, so there goes another billion or so.

 

Unless China & India re-commence their buying of our dirt oil & gas the economy is going down thus our exchange rate.

 

See how the govt has been agreeing to major share purchases of many Aust mineral & other Co's by the Chinese etc.

 

Typical politicians ways - sell off the farm for short term gain but couldn't care less about the long term pain.

 

The non government owned Australian Reserve bank & its Banksters usually meet & decide how much more money they & their cronies will make by manipulating our currency, the first week of every month.

Edited by rico
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breakfast
Unless China & India re-commence their buying of our dirt oil & gas the economy is going down thus our exchange rate.

 

This is the clincher.

 

I read it takes 9-18 months, historically, for relatively small increases in M2 to impact on inflation of consumer prices.

 

The trillion+ printed up in Q4 of 2008, therefore, by this rationale, should follow something similar. One unique feature is the colossal volume dispatched.

 

Let's say that takes 9 months, to be conservative. That means Q3 or Q4 2009 prices rise.

 

But wait, there's other variables.

 

To begin with, the printing occurs in a deflationary scenario, only part of which is accounted for. A good analogy I read is the concept of turning the tap on in the bath after the plug has been removed.

 

Alt-ARM loans, credit card loans have not soured. The credit contraction has not deepened yet to include traditionally "premium" loans, from good wage earners.

 

As unemployment falls, so too will credit repayments. There is a long way to go.

 

Deflation therefore should be a force to contend with in the near term.

 

Right now, stocks are up. Unless the stimulus policy intervenes in time for loan defaults, deflation will resume in an inverse relationship with the Dow.

 

Then, commodities ought to fall with the rising deflation. This means a lower AUD. Possibly much much lower. Early predictions were 45c to the USD.

 

Then the tide is truly out before the tsunami. A potentially great entry point if you stayed in cash. Then is the time to enter Aussie commodities, especially energy and precious metals, if this scenario plays out. But, there are always complications :D

 

After that, commodities may rise dramatically, led by energy. Cash is not the place to be as we move out of that quadrant.

 

Chinese investment is not a bad thing if controlled. If you let them, they will dominate. China is not Japan.

Edited by breakfast
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Guys, relax

 

as I said IF the central bank will lower rates.

 

For now, we are in a big rally. 72 cents I believe.

 

 

Put your Aussies into gold and silver, that;s it for today.

 

.

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  • 1 month later...

As usual, I am not going with the flow on currencies. Sell AUD, the rally seems to be weakening, normal territory, any interest rate decrease will be bad for the AUD, so I reinstate my recent comment to watch the central banks announcements.

 

/.

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Effervescent
As usual, I am not going with the flow on currencies. Sell AUD, the rally seems to be weakening, normal territory, any interest rate decrease will be bad for the AUD, so I reinstate my recent comment to watch the central banks announcements.

 

/.

 

It is just the US currency falling. All major currencies are rising very quickly. The Canadian $ might hit parity many are saying. If it does that is when I would invest more in metals. It might be worth holding off for a few weeks at least.

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  • 4 months later...

Interesting to look at comments in hindsight. My bet for a dinner at the Marco Polo that the aussie dolar would be 42 PHP by mid 2010 is looking good but I may have peaked a bit early.

 

It's amazing that the aussie dollar was 29PHP in January and 60cUS but now is over 42PHP and 92cUS. I hope you aussies retired in he phils are enjoying the ride. Our Reserve Bank Governor raised interest rates by .25% yesterday with more to come and said he wouldn't rule out the $A reaching US$1.10 which seems impossible to me.

 

When i first visited the Phils as a young backpacker in the early 80's the US$ was 8PHP and the $A was 7PHP so it's all relative and those with an income from western countries will do weell in the Phils in the long term.

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