RBA drops rates 50 basis points

NAB chief economist says the previous two rate cuts didn't help the housing market, so he's dubious about the prospects of further rate cuts having a positive impact (what a fool).  He neglected to mention that the banks didn't pass on the previous cuts in full, and subsequently raised their rates independently of the reserve, thus stomping on any prospect of positive sentiment improving as a result of lower rates. The banks should do themselves a favour and pass on the rate cuts in full, which would no doubt result in them seeing greater demand for their loans. Can they resist the greedy impulse to pocket some of the cut?

Yes, I got happy for about 5 seconds, and then figured, what the heck. The banks wouldn't necessarily cut my loan by 50 basis points. It's pretty frustrating, but this is reality I guess.

Optimism abounds when the RBA tweaks the rates….funny really….yes..another way for the big banks to tweak their profit margins as Fword and JPcashflow point out. Also another way for property spruikers to lay claim to the spurious potent of the real estate market to be revitalised. Are people that …ummm..lets say that blindly optimistic?

As i just read elsewhere…There is real growth and there is fraudulent growth . Real growth comes from taking inputs — labour, capital, energy, raw materials — and turning them into something people want, preferably something that’s useful or maybe beautiful. This growth comes from enterprise, but requires all those inputs, not least energy.

But, Fraudulent growth comes from debasing the currency, increasing the money supply, and expanding credit. You generate the appearance of economic activity by hosing down the economy with money, much the same way you’d pour gasoline on a fire. It’s bright, hot, and loud for awhile. But the only way to keep it going is to pour more on the fire. And even then, all you’re doing is creating an incredibly warm sideshow. It’s not real growth.

The 50 basis points drop could also be seen to discourage saving and therefore makes it harder for first home buyers to achieve their hefty deposits needed to enter the market…Ahh..theres many ways to look at statistics aint there…

Perhaps there is a need to look at why the engine needed restarting..why the battery was flat in the first instance Xdrew….

Who was the roman who twiddled on his fiddle, whilst rome burnt?…

His name was Nero .. and it remains a false accusation against Nero .. as the fiddle wasnt even invented at that time in history.

Nero may have been a madman .. and in his operation as emperor a troubled genius .. but he was not a fool.

The 50 Basis points SHOULD discourage saving. The major problem is that people are so fixed on existing price schedules and the possibilities of discounts from existing price schedules that they believe it will continue to happen. The ongoing inflationary rate that is broadcast over the media includes depreciating items such as plasma TVs .. computers and mobile phone technology. That produces a FALSE inflationary rate which biases any movement in monetary streams. Which actually devalues the buying power of your money as the real inflation is not dealt with properly in either annual increases or ongoing expenses. This means standard consumables keep going up .. the wage does not .. and it gets to the point where something has to give .. either groceries .. or the mortgage. And unsurprisingly enough .. there ARE people who will give up groceries over rent or mortgages. Literally reducing their consumption of food .. for the potential of paying their rent / mortgage payment.

Not a healthy procedure.

What needs to happen in the nearer term is the publics UNDERSTANDING of money needs to change. Once they have to reset their expectations as to what they can get for their money .. they wont be as scared to spend it.

The banks recently raised rates independent of the reserve bank by 0.10% or so. The Reserve Bank cuts rates by 0.5%. The banks will now pass on 0.35-0.4% rate cut.

So the net reduction in rates will be about 0.25% – 0.3%. As I see it, the reserve needed to reduce rates by 0.5% to get a reduction in variable mortgage rates of 0.25%.

Cheers,
Luke

Same old story thought 35 bps off what base rate.

Cheers

Yours in Finance

See NAB went down 32 bps this afternoon.

At least that is something from one of the majors.

Cheers

Yours in Finance

I dislike how swan calls the banks greedy and that more rate cuts are needed, yet he and that other moron Julia implement a carbon tax
The ripples of the carbon tax will cause more problems!!!

Thanks god work pay for my fuel and car lol
But any extra money goes into my bussiness

Also news just in banks just dropped their service levels