Interest Rates

[gfresh]

Edit: Forgot to add that it will reduce our dollar making petrol, and imported goods expensive making living costs are bit harder for people not in the market.

:iamwithst exactly..

1. Dollar falls much more than 0.25%
2. Cost of imports rises (helping retail to continue suffering)
3. Petrol costs will probably rise (there goes much of that $20/30/wk saving)
4. Cost of credit cards, other forms of finance will probably still will remain expensive for those still in debt.
5. Overseas funding still expensive for longer term finance. Banks still need to source a lot of their funding from there.
6. RBA cannot keep lowering rates due to above inflationary pressures.
7. There is probably a point whereby even if the RBA lowers, the banks cannot lower due to 5. Not sure where that point is, but it won't be pretty for confidence.

This is false cheer, and the reality of such will soon set in a few months.

 

[pepperoni]

Agreed - people in the market will get squeezed more than the $40 a month they save ... and the drop wont encouraging people to enter the market ...

They will need many drops before they stoke the flames again ... and still there wont be any new wood on the fire for years!

 

[Julia]

I renewed one today and had to take a 25 point cut. The banks are allowing for the drop now according to my info.

And I bet they take this opportunity to drop deposit rates further.

 

[noirua]

Interest rates remain much too high. They should have been lowered to 5% about 1 year-a-go. Rudd & Co have been to slow off the mark.

 

[aleckara]

Interest rates remain much too high. They should have been lowered to 5% about 1 year-a-go. Rudd & Co have been to slow off the mark.

Firstly Rudd and Co don't really control interest rates, other than through the budget and its effects. The RBA does. In fact with a lot of their tax measures being blocked in the Senate I don't see how they can really do anything to the interest rate right now. They might just get elected out simply because they can't implement anything.

Second of all why are they too high? If the incentive to save doesn't match the incentive to borrow (i.e we have to constantly source our capital from overseas) I would argue that maybe they have been too low for awhile unless we are still a growing economy (and to be honest I think we have passed that stage). But of course it isn't a floating market, the RBA manipulates it for economic purposes. And I'm sure they are more qualified than you to make that decision.

 

[noirua]

Firstly Rudd and Co don't really control interest rates, other than through the budget and its effects. The RBA does. In fact with a lot of their tax measures being blocked in the Senate I don't see how they can really do anything to the interest rate right now. They might just get elected out simply because they can't implement anything.

Second of all why are they too high? If the incentive to save doesn't match the incentive to borrow (i.e we have to constantly source our capital from overseas) I would argue that maybe they have been too low for awhile unless we are still a growing economy (and to be honest I think we have passed that stage). But of course it isn't a floating market, the RBA manipulates it for economic purposes. And I'm sure they are more qualified than you to make that decision.

Thanks very much M8, that's given me a good kicking.

 

[noirua]

Firstly Rudd and Co don't really control interest rates, other than through the budget and its effects. The RBA does. In fact with a lot of their tax measures being blocked in the Senate I don't see how they can really do anything to the interest rate right now. They might just get elected out simply because they can't implement anything.

Second of all why are they too high? If the incentive to save doesn't match the incentive to borrow (i.e we have to constantly source our capital from overseas) I would argue that maybe they have been too low for awhile unless we are still a growing economy (and to be honest I think we have passed that stage). But of course it isn't a floating market, the RBA manipulates it for economic purposes. And I'm sure they are more qualified than you to make that decision.

Hmmmmmmmm, I've had further time to ponder the ifs the buts and the maybes. Many Governments in the World don't fix interest rates anymore but members of it open their mouths to put pressure on those who do. Or perhaps cleverly address one or two, who in a vote, could swing it to their way of thinking.

President Bush gave the Fed no options really and they followed what he said. The UK Chancellor has just done the same to the Bank of England: Will they cave in?

Kevin Rudd & Co opened their mouths continuously over inflation and their influence pushed rates up.
I think the rates went far higher than they should/would have done. What do I know? How qualified am I? There yah goes, you can't know for sure?

 

[noirua]

United Kingdom have just announced a 1.5% reduction in interest rates from 4.5% to 3%. Lowest since May 1954.
Car sales down 23%, house prices down 15% and a raft of very poor data seems to have pushed the Bank of England into making a move.
Bank of England reports a severe economic contraction. UK in a very sharp recession.

 

[doctorj]

Wow.

The markets had only priced in a 50bp move...

 

[noirua]

The Swiss have surprisingly lowered their libor rate from 2.5% to 2%.

 

[noirua]

European Central Bank has cut the Eurozone rate by 0.5% to 3.25%.
UK FTSE falls 5.7% and sterling by 3.24 US cents.

 

[Aussiejeff]

OK. So now the scuttlebutt is that central banks are "racing to see who will be the first to reach zero" in the Great Rate Race.

Hmmm. I'm not sure about the economic wisdom here.

Can someone please tell me what will happen IF after slashing their rates to 0.0%, the global financial crisis actually keeps getting worse??

Is there something "up their sleeves"?

Or is that it.

Game over?

P.S. What about the $Trillions kept worldwide in "safe" cash accounts for retirees and super? Plummeting interest rates surely aren't going to help the value of those accounts? With shares worth bugger-all and super apparently heading the same way, what then?

 

[Largesse]

P.S. What about the $Trillions kept worldwide in "safe" cash accounts for retirees and super? Plummeting interest rates surely aren't going to help the value of those accounts? With shares worth bugger-all and super apparently heading the same way, what then?

 

[Aussiejeff]

Blast!

I was hoping for some sound FX too!

LOL

On second thoughts, the Fed might have to sell all their nukes to them pesky Russkies to pay for their retirement plans....

 

[BradK]

Gulp.... interest rates of 4% to the consumer? Out of the question by mid-2009?

Steeling myself for the pokies and plasma attack!

Could we have a go at young, uneducated, single mothers on welfare too???

Brad

 

[Aussiejeff]

Yet again, today, is more of the typical babble-speak spouted by many media outlets:

"EUROPEAN stock markets have closed sharply higher, getting a boost from gains on Wall Street as investors bet that a very weak US jobs report would prompt more interest rate cuts".

Since when do "investors" make "bets"? I'm pretty sure that making dailly "bets" on the markets is more the domain of "speculators" or "gamblers" - NOT "INVESTORS"!

Crikey. Why anyone in their right mind would want to throw wads of cash at company shares when the economy is heading south at a great rate of knots on the speculative presumption that "an interest rate cut" will fix everything is a quite startling assumption - especially so given the pathetic and mostly negative response by the financial and stock markets to a plethora of "massive" interest rate cuts ALREADY.

How can these media wankers get away with this totally blinkered, over-optimistic faith in the "positive-effect-of-interest-rate-cuts-on-the-stockmarket-CRAP"?? Do they really believe what they are printing / saying?

What's to cheer in a succession of boingo-boingo dead cat bounces?


*sigh*

End anti-mass-media rant.

For now.

 

[Geoff]

Can someone please tell me what will happen IF after slashing their rates to 0.0%, the global financial crisis actually keeps getting worse??

-1% interest. The bank pays you to borrow money. Thousands of struggling middle age families take out huge loans and spend big, stimulating the economy dramatically. RBA has to throw interest rates back up to limit inflation, everybody forecloses on their loans and THEN we get the big bada boom :

 

[noirua]

China has reduced interest rates for the third time in recent months, from 6.66% to 5.58%.
The Banks minimum deposit requirement has come down to 15.5%.


Have you voted at the link below yet?

Here's your chance as time is getting short: http://www.thebull.com.au/the_stockies/forums.html

thank you very much, you're a ***

 

[noirua]

Reports that the UK may reduce interest rates from 3% to 2% on Thursday. Some forecast rates below 1% in 2009 and the RPI inflation figure, and growth, moving to -2%. This follows continuous job cuts at more and more major companies. Country looks to be in trouble after tax cuts last month and the British Pound crumbling fast.

 

[Aussiejeff]

Reports that the UK may reduce interest rates from 3% to 2% on Thursday. Some forecast rates below 1% in 2009 and the RPI inflation figure, and growth, moving to -2%. This follows continuous job cuts at more and more major companies. Country looks to be in trouble after tax cuts last month and [size=+1]the British Pound crumbling fast[/size].

Ahhh, I love the smell of EuroPoms in the morning....