Comments on Adam Carr “SCOREBOARD: RBA of unreason”, 8/02/2010, http://www.businessspectator.com.au/bs.nsf/Article/interest-rates-Reserve-Bank-economy-inflation-fina-pd20100208-2FVV5?OpenDocument&src=sph
The RBA is now taking political considerations too early. They should have raised the official cash rate to normal levels that is also appropriate relative to inflation target.
Only in that case, when federal election is called they can afford to be more politically neutral in the campaign period.
Was that the RBA still felt the effects of the global recession on Australian interest rates?
Was RBA also confused/stunned by Copenhagen result on climate change? One may have to wonder.
Showing posts with label RBA. Show all posts
Showing posts with label RBA. Show all posts
2010-02-08
2009-10-06
RBA's move wise not gamble
Comments on Isabelle Oderberg “Australia's rates gamble”, 6/10/2009, http://www.businessspectator.com.au/bs.nsf/Article/Rate-rise-rates-reserve-bank-pd20091006-WK7D9?OpenDocument&src=sph
The RBA’s move to raise interest rate is wise and completely justifiable. It is a pre-emptive move in the context of a potential bubbling housing market and the most rapidly recovering economy in the industrialised world.
It is wrong to assume and argue that the RBA is wrong in raising the interest rate today.
It is irrational to say that because a large part of the world is still in difficult the Australian economy is also in difficulty.
While international economies are important in an integrated world, it is also important which of those international economies are impacting us the most right now and in the near future.
It is irrational to reason that because some people representing special interest groups have said that “this could also derail progress made in the building sector and mortgage market” then it will do that.
The RBA’s symbolic move is sending a useful signal to consumers and business alike that interest rates cannot and will not stay for too long at the abnormally low, emergency levels. Any decisions on long term asset purchase should take a long term view on the impact of interest rates.
That is important to prevent another rapid overheating of the housing market in Australia or at least to minimise the chance of that happening.
Oderberg should read the article “Realism from the RBA”, by your colleague Stephen Bartholomeusz today on the same website.
The RBA’s move to raise interest rate is wise and completely justifiable. It is a pre-emptive move in the context of a potential bubbling housing market and the most rapidly recovering economy in the industrialised world.
It is wrong to assume and argue that the RBA is wrong in raising the interest rate today.
It is irrational to say that because a large part of the world is still in difficult the Australian economy is also in difficulty.
While international economies are important in an integrated world, it is also important which of those international economies are impacting us the most right now and in the near future.
It is irrational to reason that because some people representing special interest groups have said that “this could also derail progress made in the building sector and mortgage market” then it will do that.
The RBA’s symbolic move is sending a useful signal to consumers and business alike that interest rates cannot and will not stay for too long at the abnormally low, emergency levels. Any decisions on long term asset purchase should take a long term view on the impact of interest rates.
That is important to prevent another rapid overheating of the housing market in Australia or at least to minimise the chance of that happening.
Oderberg should read the article “Realism from the RBA”, by your colleague Stephen Bartholomeusz today on the same website.
2009-09-02
RBA needs caution to raise interest rate at this stage
Comments on Michael Stutchbury “Stevens signals panic has gone”, 2/09/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/stevens_signals_panic_has_gone/
Yes the Stevens and the RBA are likely to be on the right cause in terms of the next interest move – going up as opposed to down. The world economy is improving and the threat of a financial meltdown is gone further and further away by the day. There is little reason to suggest that the interest rate will need to go down any further.
However, given the fragile of the world economy though improving, and the relatively moderate commodity prices compared to their peaks a year or two ago, and the over-capacity in some countries that are important to Australia’s imports like China, inflation in Australia is unlikely to be a serious threat for the near to media terms, although the housing market should be watched very closely for bubbles forming. The economy is unlikely to be over heated soon.
As a result, interest rate can still be held at its current level, until other conditions both outside and inside Australia change and inflationary pressure is forming. Some of the government’s fiscal stimulus may just lift the economy to a reasonable growth state without being too excessively expansionary. Further, some of the stimulus is going to come off the boil soon, like first home’s grants scheme.
I would personally advise the RBA against raising the interest rate too early and too soon. A balance should be struck between guard against inflation and promotion of growth. In the current circumstances and at this stage, a caution on the latter is likely to be the better choice for the RBA.
Yes the Stevens and the RBA are likely to be on the right cause in terms of the next interest move – going up as opposed to down. The world economy is improving and the threat of a financial meltdown is gone further and further away by the day. There is little reason to suggest that the interest rate will need to go down any further.
However, given the fragile of the world economy though improving, and the relatively moderate commodity prices compared to their peaks a year or two ago, and the over-capacity in some countries that are important to Australia’s imports like China, inflation in Australia is unlikely to be a serious threat for the near to media terms, although the housing market should be watched very closely for bubbles forming. The economy is unlikely to be over heated soon.
As a result, interest rate can still be held at its current level, until other conditions both outside and inside Australia change and inflationary pressure is forming. Some of the government’s fiscal stimulus may just lift the economy to a reasonable growth state without being too excessively expansionary. Further, some of the stimulus is going to come off the boil soon, like first home’s grants scheme.
I would personally advise the RBA against raising the interest rate too early and too soon. A balance should be struck between guard against inflation and promotion of growth. In the current circumstances and at this stage, a caution on the latter is likely to be the better choice for the RBA.
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