Lower interest highlights Australia’s economic condition
The decision by the Reserve Bank of Australia (RBA) to lower the official cash rate yesterday (June 6) highlights Australia’s economic condition and the nation’s favourable financial state, relative to other countries around the globe.
Rather than having to focus on mitigating negative economic conditions in Australia, the RBA is actually trying to shield the nation from adverse circumstances overseas.
In his statement explaining the 25 basis point cut to 3.5 per cent, RBA governor Glenn Stevens spoke about global situations that have influenced policy at home.
“The board has noted previously that Europe would remain a potential source of adverse shocks.
“Europe’s economic and financial prospects have again been clouded by weakening growth, heightened political uncertainty and concerns about fiscal sustainability and the strength of some banks.”
Comparatively, economic potential in resource growth, property investment and many other avenues are apparent in Australia due to its low unemployment figures and strong finances.
In recent months, the International Monetary Fund and the Organisation for Economic
Co-operation and Development highlighted Australia as the standout economic performer out of all industrialised nations and forecast the economy to experience the most growth over the next two years.
Although Australia’s economic condition is quite favourable, consumer confidence is a very important factor that affects growth both directly and indirectly.
“When it comes to monetary policy, expectations are every bit as important as the rate moves themselves, so it’s imperative the RBA sends consistent signals about the direction of rates so that borrowers have certainty,” said Housing Industry Association senior economist Andrew Harvey.
RBA governor Stevens tried to address these concerns with his explanation of the rate reduction.
“With modest domestic growth and a weaker and more uncertain international environment, the outlook for inflation afforded scope for a more accommodative stance of monetary policy.”
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Really? You might want to read : Reining in the RBA – http://www.businessspectator.com.au/bs.nsf/Article/Australian-economy-jobs-numbers-GDP-growth-rate-cu-pd20120607-V2544?OpenDocument&src=mp
The RBA is trying to save retail in the Eastern states in my opinion as well as give the banks a nice slap in the face for not being under the thumb. Retail is really bad at the moment, and retail holds a lot of jobs for young people (young people often consume as much as they earn), as well as providing a lot of tax via easy GST.
The media has punched the average consumer in the face repeatedly with "The Sky is falling – will you survive?" type headlines for the last couple of years, and this along with a government more concerned with what their friends on facebook think (opinion polls) than running the country has made for a dose of technical recession.
Change of government, repeal of carbon tax, and a resolution to the long running saga in the Eurozone should be a nice vitamin pill for the economy.
Good time to be a cashed up buyer.
D
With the continued slow down and cuts in interest rates, the Aussie no longer looks as appealing as before as a carry trade. Providing investors with one of the highest interest rates in the developed world. Overall, Australia is number 3 in bank rates behind emerging market countries; India and China. My view is that it is a time where opportunity costs are low in Australia to purchase a home OR if one believes the China growth story is slowing, converting AUD to another currency to weather the storm until things settle again.
GlobalTraveller
http://www.evaluebusiness.com
I manage my foreign currency with CO http://bit.ly/hh4LtR
Good question, who does write these blog posts ? ?
LOL. Well I wrote this one – https://www.propertyinvesting.com/blog/news/nine-people-decide-fate-property-development
Nice to see the effort is appreciated.
Cheers
D
[quote=DWolfe]LOL. Well I wrote this one – https://www.propertyinvesting.com/blog/news/nine-people-decide-fate-property-development
Nice to see the effort is appreciated.
Cheers
D
[/quote]
Light years ahead of the regurgitated MSM rubbish above.
just wonder , what is the improvement of real estate market in the near future..Is it better to invest in property or just continue with renting.
please advice.
http://www.liveinvictoria.vic.gov.au/
waiting for a reply..
@ praty… who know's mate. We are all only going by contradictory info and gut instinct.