All Topics / General Property / Tuesday 04th November 2003

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  • Profile photo of xyzzyxyzzy
    Participant
    @xyzzy
    Join Date: 2003
    Post Count: 178

    The first Tuesday in November!

    Not only do we have the running of “the race that stops the nation” the Reserve Bank Board also meets in Melbourne (of all places!) today in a morning meeting whilst the rest of the city has the day off.

    For those with concerns about rising interest rates today could well be a day that the “form” becomes clearer!

    Profile photo of soleilsoleil
    Member
    @soleil
    Join Date: 2003
    Post Count: 25

    Who are your tips for the Cup?

    Me:

    Pentastic
    Makybe Diva
    County Tyrone

    Profile photo of SooshieSooshie
    Member
    @sooshie
    Join Date: 2002
    Post Count: 974

    Hi Xyzzy,

    Congrats on becomming a Moderator! [8D]
    Interest rate rises are bound to happen, sooner or later.
    I’m sure the meeting of the RB is strategically in Melbourne because of the Melbourne Cup! [;)]
    At least the sun is shining today! [8D]

    Can’t give you my tips yet, because I haven’t looked at the paper yet!

    Cheerio
    Sooshie [:)]

    When a problem is created the solution is created simultaneously

    Profile photo of xyzzyxyzzy
    Participant
    @xyzzy
    Join Date: 2003
    Post Count: 178

    There are several guaranteed winners today …

    The NSW Treasury
    The Qld Government
    The Victorian treasurer
    Crispy Bacon
    The sandgroper government and the West Auzzie’s

    They just stick their hand out and collect the turnover tax.

    Profile photo of RAC28HRAC28H
    Participant
    @rac28h
    Join Date: 2003
    Post Count: 23

    Has anyone noticed how fast this site is now running. Everyone must have their eye’s on the Cup.

    Im a winner…!![:D]

    Profile photo of xyzzyxyzzy
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    @xyzzy
    Join Date: 2003
    Post Count: 178

    And the reserve bank board have decided.

    Up Up and away!

    Profile photo of scampushscampush
    Member
    @scampush
    Join Date: 2003
    Post Count: 26

    What is the new rate xyzzy??

    kinda busy at work to look it up but can still check this site…

    thanks
    scampush

    Profile photo of xyzzyxyzzy
    Participant
    @xyzzy
    Join Date: 2003
    Post Count: 178

    Reserve Bank statement
    November 5, 2003 – 10:31AM

    Text of the Reserve Bank of Australia’s statement on its decision to increase interest rates today:

    “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 5.0 per cent.

    For an extended period, the setting of monetary policy in Australia has been mildly expansionary.

    This stance was, in the Board’s judgment, the best response to a weak world economy, very low global interest rates, downside risks to growth at home, and contained inflation. However, the need for such a stance of policy has now passed.

    This assessment is based on several considerations:

    – Conditions in the international economy are clearly improving. The US economy is strengthening and growth in Japan is higher than expected. Most of east Asia is experiencing improved conditions and China continues to grow rapidly.

    – Financial market pricing embodies more optimism about growth, and economic forecasts are being revised upwards. The appreciation of the Australian dollar must be seen against that backdrop.

    The Australian economy, having slowed under the weight of reduced exports and drought, is now picking up.

    Strong domestic demand appears to be the main factor so far, with both consumption and business investment growing strongly. Business surveys indicate unexpected strength in the non-farm economy in recent months, and the labour market is firming.

    The farm sector, as a result of improved rainfall, will experience better conditions over the next year. Hence growth is likely to be above trend through the coming year, and spare capacity in the economy will tend to decline.

    The housing market continues to be buoyant. The effect of the rise in house prices over recent years is likely to be expansionary for the economy in the period ahead, as higher wealth is accessed to support household spending.

    In the short term, these developments are unlikely to make for significant problems on CPI inflation.

    Indeed, it will most likely decline for a time, as the effects of the appreciation of the exchange rate show up in retail prices.

    Over a longer horizon, inflation is currently expected to be consistent with the target, but the risks to that forecast are beginning to tilt upwards.

    The prevailing stance of policy has been expansionary, as is clear not only from the current low level of nominal and real interest rates, but also from the behaviour of borrowers.

    Credit outstanding is rising at around 14 per cent per year, and at over 20 per cent to households. That is a much faster rate of growth than can be expected to be consistent with economic stability over the longer run.

    Short periods of rapid credit growth have not typically been a major concern for monetary policy, but this growth has been sustained for some time and at present shows no sign of abating.

    Given the above, the Board’s view is that it is no longer prudent to continue with such an expansionary policy stance.

    The strength of demand for credit increases the danger associated with delaying a tightening of policy that is called for on general macroeconomic grounds.

    AAP

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