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RBA, RBA Media Releases
mullokintyre
post Posted: Nov 17 2020, 02:29 PM
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RBA boss, Phillip Lowe said there will be no rate rises until wages growth picks up.
I guess then we can assume that there ill be no further rate cuts either.
From Todays OZ

QUOTE
Australian workers struggling with a dismal pace of wages growth in coming years will at least not face rising rates, after the Reserve Bank’s minutes from its historic Melbourne Cup day meeting made it clear that the central bank won’t tighten policy until pay packets are lifting “materially faster” than recent levels.

The RBA board pulled the trigger on a likely final rate cut from 0.25 per cent to 0.1 per cent and launched a $100bn bond-buying program on November 3 when it “became clearer that unemployment would remain high and inflation subdued for an extended period”, the minutes read.

Wages growth is a key driver of inflation, and the lingering impact of the downturn would leave a legacy of heightened spare capacity in the labour market, which was “expected to result in subdued wages growth and inflation over coming years”.

The minutes noted that the cash rate would not be lifted until inflation is “sustainably” back within the bank’s 2-3 per cent target range.

“For this to occur, wages growth would have to be materially higher than recent levels,” board members heard.

“Given the outlook, the board does not expect to increase the cash rate for at least 3 years,” the minutes read, while noting that the three-year bond rate target would be removed before the cash rate was lifted.Private sector wages inched 0.1 per cent in the June quarter as the pandemic and associated restrictions triggered wage freezes and lay-offs, bringing the annual pace to an all-time low of 1.7 per cent. The Australian Bureau of Statistics will release the September quarter update on the wage price index tomorrow, but the RBA expects annual wages growth will slump to 1 per cent by mid-2021 and stay below 2 per cent for years.

Despite positive signs of a relatively rapid recovery from the COVID-19 recession – which was acknowledged by governor Philip Lowe in a speech on Monday night – board members concluded that “the recovery was expected to be protracted and uneven”.

Dr Lowe has said lowering the unemployment rate was a “national priority”, and the minutes echoed that sentiment.



Interesting viewpoint, the assumption that Inflation is tied to wages growth.
So what is he going to do if the cost of health, food, transport, energy etc all go up without a commensurate wages rise??
What is he going to do if the punitive action by China gets even more severe and teh AUD, seen as a commodity based currency, falls out of favour and drops like a stone?
Just let it ride??
My opinions of the good Doctor are falling with each announcement.
Mick



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mullokintyre
post Posted: Nov 5 2020, 01:18 PM
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And as to be expected, the big four banks are refusing to lower their interest rates to match the lowering by the RBA.

Useless RBA now scratching their collective heads and saying, geez, what can we do now??

Mick




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Mags
post Posted: Nov 3 2020, 08:23 PM
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In Reply To: mullokintyre's post @ Nov 3 2020, 03:07 PM

QUOTE
Debt will just keep piling up, but who cares?
This is the new normal, but for how long??


Until the tax base is unable to make the bond payments.
We are a long way from that.
QUOTE
The housing bubble will expand a bit more.


Absolutely, I've had to eat humble pie, and accept I'm wrong on the housing crash. It's not coming (for a while). The dismantling of the responsible lending laws will see Ninja loans right here in Australia: Don't laugh.
It's almost guaranteed: Only today CBA announced, no forced sales until September 2021.That's right. It is a one way market: For the time being.
QUOTE
The concept of having savings for a rainy day has just been obliterated.
Nah, that wasn't today: That was the announcement of Jobkeeper. People honestly believe gov co can bail them from anything now. Next step is the UBI (and I reckon it's coming 100%). Once UBI comes in, watch the inflation rate charge to the sky. Once you remove the incentive to work, and the value of saving for the unexpected, capitalism is dead. In the next few years, self funded retirees are going to recieve the pension: Why? Because, treasury and ATO now agree, it COSTS MORE TO MONITOR THE FEW SELF FUNDED RETIREES THAN IT WOULD TO PAY THEM THE PENSION!!!!!!!
Why save to be a rich retiree, when the government will treat you the same as said rich retiree??

The economy, prices, retail, commodities, stocks, etc are all going to become unstable: How can they not? 1/3 of the world in lockdown, and the stock markets have mostly recovered??? C'mon, it's a joke now.
Play the games if you want: Just don't be the last one caught carrying the can



Said 'Thanks' for this post: Pendragon  mullokintyre  early birds  rlane  
 
mullokintyre
post Posted: Nov 3 2020, 03:07 PM
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So the RBA cuts interest rates again to almost zero.
Good for the sharemarke, bad for interest income for retirees, marginal for home owners with a mortgage, and great for those just entering
Now for the bad news.
The housing bubble will expand a bit more.
The concept of having savings for a rainy day has just been obliterated.
Debt will just keep piling up, but who cares?
This is the new normal, but for how long??
Mick



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Said 'Thanks' for this post: early birds  rlane  Pendragon  
 
nipper
post Posted: May 10 2020, 09:29 AM
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Ha. Good one



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
mullokintyre
post Posted: May 10 2020, 09:11 AM
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In Reply To: nipper's post @ May 9 2020, 05:17 PM

They forgot another key on the qwerty .
Its called a \

Mick



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nipper
post Posted: May 9 2020, 05:17 PM
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There is ongoing debate about whether Australia's recession will look like a V, W, L or U. But its profile is clearly not going to fit any simple alphabet shape.

Those sectors of the economy which had to close down were very substantial and we knew the initial hit would be huge. But the Reserve Bank was quick off the mark in responding to the crisis, with its policy initiatives in mid-March.

No matter how effective the stimulus, the productive potential of the economy has been reduced, debt burdens will be higher, some businesses will not revive and precautionary behaviour will persist.

As restrictions are relaxed, there could be a reasonably rapid return towards normality. But the opening-up process was always going to be tentative and experimental.

We already had a good reading of the Reserve Bank’s thinking from governor Philip Lowe’s speech on April 21: output down 10 per cent in the first half of this year, with recovery starting in the September quarter. Unemployment would register 10 per cent, with many more hidden by the JobKeeper wage subsidy.

Friday's Statement on Monetary Policy provided alternative scenarios that were evenly balanced between optimism and pessimism. Even the optimistic scenario has normality "a couple of years away".

It’s not surprising, then, that the RBA hasn’t seen the need to tweak the March policy package much.

Conventional policy, the short-term interest rate, was set at effective-zero in March. Forward guidance assured financial markets that this would stay for the duration. Nothing more to do here.

The March package had two more objectives. First, to encourage the banking sector to play a shock-absorber role by funding the cash-flow consequences of business hibernation and recession. Second, to ensure that the government could fund the huge deficit in prospect.

Stephen Grenville is a former deputy governor of the Reserve Bank of Australia and a non-resident fellow of the Lowy Institute



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
triage
post Posted: May 7 2019, 05:44 PM
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In Reply To: nipper's post @ May 7 2019, 04:03 PM

Didn't stop them in 2007 or 2013 though (both instances saw a change in government). It's as much a political decision not to cut the rates now as to go ahead and do it, certainly Josh Friedburger is playing it up as a sign the current government is on top of things. The RBA was in a no win situation today but they will cop some flack if they drop the rates in June and then again soon after.



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"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog
 
nipper
post Posted: May 7 2019, 05:38 PM
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In Reply To: nipper's post @ May 7 2019, 04:03 PM

Although, the bar has been lowered
QUOTE
... the RBA has put financial markets on notice that employment will need to strengthen and the 5 per cent jobless rate gradually fall to avert a future interest rate cut.
- and , the emergency setting?



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: May 7 2019, 04:03 PM
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In Reply To: mullokintyre's post @ May 7 2019, 02:45 PM

..and RBA would have been more than reluctant to move, with an election less than 2 weeks out.



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
 


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