Your Account
Community
Topics (Upcoming)
More |
View story
Reserve waits until it sees clearer waters ahead
http://www.theaustralian.com.au/business/reserve-waits-until...
Submitted by
cij
5 months, 3 weeks, 6 days, 7 hours agoBasically, despite lending to mortgages and government increases, lending to the business sector is contracting and getting tighter. That could be the reason why the RBA is not raising interest rates. If the business sector is stuffed, you can be sure household finance will be stuffed too, which means house prices will be stuffed, which means the banks will be stuffed.
#1 - By PeteD, 5 months, 1 week, 13 days ago.
Ah...but...
My understanding is that since the GFC started, mortgage rates were "sheltered" by the RBA and politics. They were front page, constantly debated, high profile. But behind the scenes, where ignorant Australian's need not think about, interest rates for small business have been going up and up. The banks have been gouging small business (at least compared to mortgagees). So if the RBA only now realises this, they are completely incompetent. And, I think they are anyway. They are trying to 'control' Australian credit flows, using a big blunt stick. They have all the finesse of someone typing an email with their forehead. I think the RBA should not be concerned with any of that. That is for the Government to be concerned with. I had a feeling things would come to this. I think the RBA has been playing a game. The 'threat of action'. 'Maybe if we hurt them a little bit, they'll listen to us?' This is how I suspect things will pan out in the next few years, in respect to the RBA.
1) RBA toys with rates, pushes them up a bit #2 - By PeteD, 5 months, 1 week, 13 days ago.
And, I think it is also worth considering WHO the RBA actually is.
They are a board. Glenn is merely the Chairman. At least two of the board members have proven themselves to be ignorant to the property bubble and even property bulls themselves. One of those people is the scumbag Ric Battelino. #3 - By cij, 5 months, 1 week, 12 days, 20 hours ago.
We read somewhere in the papers that Ric Battelino is a "hawk" with regards to raising interest rates (i.e. he wants a more aggressive raising of interest rates).
How to resolve this with his real estate attitude? #5 - By PeteD, 5 months, 1 week, 12 days, 18 hours ago.
Ric must be a paradox then. Everything I have heard out of his mouth (well, his articles and speeches) has been total nonsense.
I think he has the Real Estate industry in his pocket personally. #4 - By cij, 5 months, 1 week, 12 days, 20 hours ago.
And also, the AUD will go down rapidly.
#6 - By PeteD, 5 months, 1 week, 12 days, 18 hours ago.
Yes, surely.
Which will hurt interest rates locally, as a lot of the capital is source from overseas. So it is a bit of a conundrum.
RBA raise rates = high AUD = higher mortgage rates.
But there are other factors (which I know you already know of CIJ). So it seems like a balancing act. The RBA doesn't want to raise rates, but also wants to keep a high AUD. Theoretically, it shouldn't even be in this position. But I suspect that when it comes to the crunch, the RBA will drop rates again, because it will be fighting a losing battle and will not want to lose favour with the population or the politicians. The politicians could potentially get rid of the RBA if there was enough backlash. So obviously the RBA wouldn't want that. And it is surely easier to blame high interest rates from banks on the overseas lenders and banks themselves, rather than have the RBA raise rates and take the blame itself. (Incidentally, many lobbyists for the RE industry don't want the RBA to raise rates. Imagine what these same people would do if the RBA 'appeared' to destroy the economy? It'd be all out war) |
