My Budget Thoughts
The Australian Federeal Government released its Budget on Tuesday night. Overall i thought the Budget was okay but that the $1.5 billion dollar surplus seems unlikely. I mainly think the Government dropped the ball by not helping the real estate market at all. Also they introduced the mining royalty tax and then did not pass on the promised 1% company tax drop. This will only hurt the Australian economy and the mining industry which is the back bone of the Australian economony. On the positive side cutting down on golden handshakes is a good thing as is increasing the Superannution guarantee from 9% to 12%.
I would like to have seem some money spent on addressing housing affordability in Australia and possible reductions in stamp duty (which i know is a State tax). Instead i felt alot of the benefit of the Budget went to lower income families and families with school aged children.
Heres hoping the State Budget provides more for the real estate market.
Do Reserve Bank Interest Rate Cuts Matter?
With the Reserve Bank of Australia meeting tomorrow i have started to wonder given the recent actions of the ANZ bank if the these meetings really matter anymore. For those of you that are unaware the ANZ recently announced that it will making changes to its interest rates independent of the Reserve Bank. They claim this is due to the fact that more of there funding now comes from sources separate from the Reserve Bank.
If other banks follow suit then the Reserve Bank altering interest rates will have limited affect on us. Now ofcourse i always thought the Government had the power to make the banks follow suit but maybe they do not.
It is not all bad news the independence could cause the banks to be more aggressive with interest rates. Or they may go the other way and band together and keep them high. Time will tell.
Reserve Bank of Australia Cuts Interest Rates to 4.25%
The Reserve Bank of Australia today cut interest rates to 4.25%. What a great Christmas present that is for us. Now the question is will the rate cuts be passed on?
More Interest Rate Cuts?
With the RBA finally dropping interest rates in November, there is now talk that they will look to drop them again in December. The economy is still struggling (except for the mining sector) and inflation is inside their target 2-3% band. The RBA might look at cutting them in December as there is not meeting in January. There is also talk that the rates might be cut by more than 0.25% with the cut possibly being 0.5%.
What does everyone think about the possibility of a rate cut in December?
Panic Here Makes Little Sense
With all of the world’s financial problems people in Australia seem to be caught up in the panic and fear that those economic problems will be hitting us. The truth is this panic makes little sense. Australia has low debt and great economic fundamentals with unemployment about 5%, strong economic growth, strong exports and terms of trade. The Government is commited to a Budget surplus and the Reserve Bank of Australia has plenty of ammunition should they need to stimulate the economy. Also Australia’s future is more tied to India and China which is going well and not Europe and USA.
