I have read some that economists predict a fall in interest rate towards the end of next year for Australia. What they are saying basically is that RBA is quickly lifting up rates right now to spook the borrowers who are overcommitting them selves , They are not increasing the rates too strongly , but by little amounts to (little slap on the wrists) to curb our obsession for debt.
I also wonder sometimes if the so called terrorists who have been warning australia for some time now do strike ! , Is it enough to really hurt our economy ?

diddy

Interestingly/scarily, destruction caused by events such as the World Trade Centre bombings do not show up as a negative in GDP figures, whereas the rebuilding and other economic activity shows as a plus.

This is worrying and would reinforce some people's view of economics as 'the dismal science' (Keynes?).

Talking of interest rates, what will happen when the US economy recovers & the Fed is forced to raise the VERY LOW interest rate over there?( US rate is 1% to our 5.25%)

For eg Price of gold, US/Aus exchange rate, price of equities, effect on super funds with holdings O/S & property.

It might be sooner than we think according to Terry McCrann, & it could be by up to 3% by mid-year.

For starters our $ would dive, & "a big rise in US rates would send one big financial tidal wave crashing across the Pacific"

It would help our farming friends in the bush though! It would also help the stocks in my portfolio a little bit (through more profitable exporting) which are allready well above water...Win/Win as far as i'm concerned.
People who may be exposed to this tidal wave had better build a big arc so they don't go underwater when this happens!

DLR

Well, the US Federal Reserve, in its wisdom, has decided to keep US rates at 1%. This is LOW.

I suspect that now AU$ has shot up so much of late, all rather fast, and Aust. inflation is still low at 0.5% for last quarter, 2.4% for the last year, that the Reserve Bank may not, just may not, raise rates this coming Tuesday.

Many of the pundits were certain that there was another 0.25% in it for Aust, and soon, but there is less pressure now.

So its wait and see, again.

& after the sell off of the last week, then watch the All Ords jump out of the starting blocks on Wednesday, if it doesn't raise.

Gone

Gone

Aust and US elections may complicate matters, I agree. Not that there is direct interference but maybe RBA acted early/ earlier and Fed is worried about their Nov timetable.

I noticed US Fed changed its language, implying that it will, soonish, raise rates, and no longer maintains the fiction that 1% is normal and for next 1000 years.

So now, as the market has an attention span of a gnat, I will not make any forecast for March, despite having got Feb and Nov 93 calls right.
(Luck, sheer blind dartboard-style luck) (But the XOA didn't "roar"; at least it didn't fall)

http://www.bloomberg.com/news/markets/commodities.html

http://www.smh.com.au/articles/2004/02/ ... 41744.html

cheers eG

The company I work for, in the building industry, is getting worried about pricing, inflation and the whole shebang.

Basically our raw material is based on the world market price, and this has gone up at least 20% of late - everyone is blaming Chinese demand.
Pushing through 5% rise next week, and another 5% in 2 months time "to lessen the impact"

Also, Coy. has just instituted "rise or fall pricing'' policy, meaning everything is open, contracts are 'flexible' and we can put up or lower (ha ha) prices as we wish.
Customers are getting nervous, but the oppositon suppliers are in same position.

This probably means:

1. Costs for industry are rising faster than current inflation
2. Coy profits are being squeezed
3. Building & house costs will be higher (unless intermediaries accept cost/ price squeeze)
4. House prices will not drop as quickly as some tip because expensive new homes means buoyant demand for existing places, and then
5. Less supply means maintenance of these higher than expected prices,
and
6. the old bogey, inflation, is lurking

So the next question is: where are neutral interest rate levels?

A. Somewhat higher than now, but

Q. when?

A. (perhaps around the same time) when US moves its rates

Of course it is more complex than this, but I am seeing pressures, and a slowdown.

Gone

so china is the growth engine underpining things--------i am afraid of misquoting,but the % of non-performing debt held in their banking system seems to be about what the japanese held a decade or so ago[back in the days of the miracle economy,before the reccession.] stll-she'll be right hey?