Hola Eco gang,
thought I would make sure you are out there and thinking like the guru.
So I have a number of things for you to consider.
1) If you want the absolute up to date information, or have questions you need answered then call the HSC Advice line on 131112. It is open from 4pm to 10pm from 2-4th Nov for Economics, Check out this link if you want dates for other subjects.
2) The latest inflation figures show that underlying inflation is 3.5% and this is why the RBA put up rates by .25% in for the first time in 18months in Oct. The underlying rate is the important figure for the RBA, so whilst headline inflation is still only 1.3% and thus below the 2-3% target, the underlying figure is important as economic conditions being weak is the only thing holding inflation from soaring.
Thus Australia has an underlying inflation problem- which the RBA only has 1 way of dealing with this issue. Unfortunately this will not solve the problem (this requires micro reform regarding productivity and infrastructure investments)
SO when the RBA meets on this Tuesday (which is always put into the background some horse race) it will be interesting to see what happens.
3) The latest figures I have are as follows;
12 months ago
Growth 0.6% June 09 2.7%
Unemployment 5.8% Aug 09 4.1%
Inflation 1.3% Oct 09 4.5%
Household savings -0.4% Sep 09 +0.9%
cash rate 3.25% 7.0%
current account -$38.4bn -$72.5bn
ToT 109.0 Jun 09 120.1
Good luck.
Saturday, October 31, 2009
Thursday, October 8, 2009
1.5% inflation = interest rate rise??
The latest RBA meeting on the 6th of October has signalled the end of what Glenn Stevens has called a 'mild downturn'. After holding interest rates at 3% for 12 months the cash rate has now started heading up (though only slightly ) after the RBA decided to put them at 3.25% on Tuesday.
After Lehman Bros in the U.S filed for bankruptcy in Sept 2008 the RBA cut the cash rate by 4.25% over a 6 month period in a bid to prevent major credit and AD issues in Australia.
Thus the signal that Australia's downturn is possibly over has been given by the RBA. If you want to read why G.Stevens believes Australia avoided the major problems experienced in the G7 in particular then read this concise summary.
The question remains- Is Australia out of the recession? and why is the cash rate rising when inflation is still below the 2-3% target range?
Wll the answer is a pre emptive strike, a move to curb excess borrowing at a low rate of interest and to send the market a signal.
Of note is that unemployment has fallen very slightly from 5.8% to 5.7% which is a further indication of a return to expansionary conditions. What will be interesting is that Glenn Stevens also said "a degree of policy discipline will be needed". This means that he expects fiscal policy will also slow down its expansionary phase and that spending will decrease- however will this happen in light of the fact that the next Budget leads up to the next election?
It will be interesting to see what the ALP does??
After Lehman Bros in the U.S filed for bankruptcy in Sept 2008 the RBA cut the cash rate by 4.25% over a 6 month period in a bid to prevent major credit and AD issues in Australia.
Thus the signal that Australia's downturn is possibly over has been given by the RBA. If you want to read why G.Stevens believes Australia avoided the major problems experienced in the G7 in particular then read this concise summary.
The question remains- Is Australia out of the recession? and why is the cash rate rising when inflation is still below the 2-3% target range?
Wll the answer is a pre emptive strike, a move to curb excess borrowing at a low rate of interest and to send the market a signal.
Of note is that unemployment has fallen very slightly from 5.8% to 5.7% which is a further indication of a return to expansionary conditions. What will be interesting is that Glenn Stevens also said "a degree of policy discipline will be needed". This means that he expects fiscal policy will also slow down its expansionary phase and that spending will decrease- however will this happen in light of the fact that the next Budget leads up to the next election?
It will be interesting to see what the ALP does??
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