Interest Rates Will Not Rise Anytime Soon

This bodes well for the property market. The majority of economists polled believe that rates are unlikely to rise for the next year or thereabouts.

http://www.news.com.au/finance/busi...king-less-likely/story-e6frfkur-1226969089180

BORROWERS can rest easy as it looks like the Reserve Bank's cash rate will not go up for the remainder of the year.

ALL 16 market economists surveyed by AAP say the RBA won't move the cash rate at its board meeting on Tuesday, and only two say there will be a rate rise before Christmas.
 
will frankston be ok?:D

Most of Frankston will be okay, except for your house, because Murphy's law is out to get you. :eek:

What this article is really saying is that we're all screwed because the economic conditions aren't looking so hot. Well, probably not screwed but we should still be in recovery mode. When rates start going up we can be happy.

We all want low rates, but low rates done help people if they don't have a job.
 
Most of Frankston will be okay, except for your house, because Murphy's law is out to get you. :eek:

What this article is really saying is that we're all screwed because the economic conditions aren't looking so hot. Well, probably not screwed but we should still be in recovery mode. When rates start going up we can be happy.

We all want low rates, but low rates done help people if they don't have a job.
Nah; but the Media keep on tellin' us how grand it all is, and the Gubbmint do too.

They are talking about Australia - not Austria - right? :confused: :rolleyes:
 
Nah; but the Media keep on tellin' us how grand it all is, and the Gubbmint do too.

They are talking about Australia - not Austria - right? :confused: :rolleyes:

I've generally found the media to be the Doom & Gloom patrol to be honest.

I don't see Australia's economy charging ahead at the moment, we need to go through a significant period of consolidation so that we can have an economy and government which reflects the reality of the 21st century. Pragmatism over idealism.
 
I'd be pretty surprised if we see any change in the official rate before Christmas. The economy is still adjusting to the change in government, and with the new Senate makeup coming into effect today, the Reserve will want to see how that plays out before changing things too drastically IMHO
 
The rumours are that the Bank of England and possibly the Federal Reserve will raise rates later this year. But even then the increases are likely to be fairly gentle.

When they do, I wouldn't be surprised if Australia follows.

That said, what's driving property prices? If it's an inflow of foreign money, then that's not going to disappear unless the global economy becomes more stable. If it's being driven by local investors then growth could slow as costs would increase.
 
The other question to consider is whether the RBA will bring in macroprudential controls on the banks, as has happened in New Zealand, and are being brought in here in the UK. These would slow the market independently of rate rises.

That said, government policy seems to be to push for growth in the property market as a way of boosting the economy, so it doesn't look likely. Particularly given the "there is no bubble" rhetoric.
 
Re macropru policies, LVR/DSR ratios, RBA don't like them, too interventionist and prefers a 'strong prudential' oversight approach.

Makes sense in Australia, with oversight of 4 big banks covering the majority of the market (at least those that are too big to fail).

Also to debunk something again, the RBA/APRA can implement this independantly from government. Its comes under their financial stability mandate.
 
Our cash rate decisions are quite far removed from whats happening in England and the US - the only link is indirect and thats the flow on from global economic activity into Australia.

I.e. is the US are increasing their rates, its because theyre worried about inflation/economy can handle higher rates (finally!). Good thing, means output is growing. That has an indirect impact on Australia (demand factors), and hence may improve our demand factors...albeit slightly.

Point is, our rate movements, while correlated because of the above, are pretty independant from their moves.

The rumours are that the Bank of England and possibly the Federal Reserve will raise rates later this year. But even then the increases are likely to be fairly gentle.

When they do, I wouldn't be surprised if Australia follows.

That said, what's driving property prices? If it's an inflow of foreign money, then that's not going to disappear unless the global economy becomes more stable. If it's being driven by local investors then growth could slow as costs would increase.
 
Hmm this is pure speculation, but the doom and gloom view is being purported by the upper echoleons of policymakers. Lowe, Gruen, Parkinson, Stevens, Ellis's (the Treasury/RBA big shots).

Why? Theyre all aware of underlying drivers in our market and have considerably more information/power to interpret it than us.

My view is their influencing the debate to damper expectations of income growth...they know productivity wont rise as fast as it needs to to maintain our income growth over the next decade...

See charts 3 and 4 here:

http://www.treasury.gov.au/Publicat...ortunities-for-Australia-over-the-next-decade

I've generally found the media to be the Doom & Gloom patrol to be honest.

I don't see Australia's economy charging ahead at the moment, we need to go through a significant period of consolidation so that we can have an economy and government which reflects the reality of the 21st century. Pragmatism over idealism.
 
Hmm this is pure speculation, but the doom and gloom view is being purported by the upper echoleons of policymakers. Lowe, Gruen, Parkinson, Stevens, Ellis's (the Treasury/RBA big shots).

Why? Theyre all aware of underlying drivers in our market and have considerably more information/power to interpret it than us.

My view is their influencing the debate to damper expectations of income growth...they know productivity wont rise as fast as it needs to to maintain our income growth over the next decade...

See charts 3 and 4 here:

http://www.treasury.gov.au/Publicat...ortunities-for-Australia-over-the-next-decade

I am seeing tough and turbulent times ahead. many of the things this country has tolerated could be afforded by strong growth and economy. as those days draw to a close difficult decisions need to be made. we cant continue to be a massive continent with a scattering of population consisting of a few tradies earning obscene wages for doing very little... the party is over.
 
At Ausprop, i'm glad someones been listening to Hockeys story! :)

I'm not sure its all as gloom and doom as its purported to be - but i do believe that Australians will need to adjust their expectations of income growth over the next decade.
 
Jawboning at its best

http://www.abc.net.au/news/2014-07-22/reserve-bank-stevens-says-monetary-policy-has-limits/5614680

The above link that suggests that the RBA is encouraging people (especially businesses) to spend more in an attempt to stimulate the economy.

I have been following the RBA's mouthings since 1989 and have never, ever seen a Governor ask folks to take more risks.

Clearly, there are zero chances of another rate rise for at least a year. If we are lucky, rates may even fall.......and that's going to be a shot in the arm for the property markets.
 
http://www.abc.net.au/news/2014-07-22/reserve-bank-stevens-says-monetary-policy-has-limits/5614680

The above link that suggests that the RBA is encouraging people (especially businesses) to spend more in an attempt to stimulate the economy.

I have been following the RBA's mouthings since 1989 and have never, ever seen a Governor ask folks to take more risks.

Clearly, there are zero chances of another rate rise for at least a year. If we are lucky, rates may even fall.......and that's going to be a shot in the arm for the property markets.

I haven't been following the RBA for as long as you but I find it somewhat disturbing to read about him making general statements about encouraging businesses to take more risks.

I'm concerned that the longer interest rates stay so low, the more people come to accept this as the normal level and the bigger the shock when they start to rise.
 
Why do people take these sorts of articles seriously? Would you take it anymore seriously if it was written by Madame Zola the fortune teller?

Because that is all economists are - glorified fortune tellers. There is no such thing as an economist 'getting it right'. If an economist says 'X' is going to happen and X does indeed happen, it's simply because they guessed right.

No one can tell you what is going to happen in the future, no matter how much you want to hear what they are saying.
 
Back
Top