The rate cut is really not a big deal and won't help really as far as the economy goes. To me this is more a clear indication of the reversal the economy is in right now which is also now being publicly brought to light by the RBA. As far as the banks go most have cut the rates of term deposits last week by 10 basis points which is more a indication of them predicting only a 25 basis point drop. We may see further cuts to term deposits and savings accounts before we even see them touch mortgage rates. Anyway since when do rate cuts only mean something for mortgage holders? The currency dropped by almost a cent so the hidden cost evens it out.
+1! And for the bolded part - funny how that works huh? AUD carry trade much? I suspect the lower the RBA pushes rates, the lower the AUD goes... and the net effect is zero (or near to), except then the RBA has no further leverage besides the dreaded QE. Although, a lower AUD is all sorts of good for exports, but all sorts of bad for imports/inflation. That's another story for another day
Used to be that Swan would be all over the media claiming credit for the RBA rate drop on behalf of the "little Aussie battler". He's been quiet ... so far. Maybe Julia will claim the glory this time. She needs a lift! Personally, it makes me sick to think that my money is now worth less because some RBA talking head in a suit says so. That money is supposed to represent the value of my labour when I earned it, is my past labour now less valuable?
I just saw Swan on the news - "banks are profitable, they should pass on the whole rate cut". And this guy is our treasurer... all he's good for is jawboning.
Here's one way to look at it. Lower interest rates means that people need to save more money because the return on their savings has dropped
Well you wouldn't have had this problem if you'd just spent your money like a good little peon instead of attempting to save it. :/ Now, if I want to be able to afford that loaf of bread next week I'll have to get off the internet and back to work
Exactly, no incentive to save. May as well invest in shares, property (if you can afford to) or just spend it.
Or buy PMs Funny that you say that bolded part though - maybe that's the goal? Give retail a bit of a boost? Meh, it didn't work for the USA though, so I don't know why it would suddenly work for us. Bloody Keynesians.
A dollar is just a unit of exchange, not a store of value and has no intrinsic value. It is released or retained by the banks at will. It is the tail that wags this sick as a dog economy in Frankenstein proportions as if it is going to make some magical difference to the reality of the immediate situation that we are in a mathematically impossible situation. Most people would call it game over but like the Titanic took time to sink, so to will the reality sink in that the game doesnt work anymore.
Well, at least the world hasn't changed that much. Swan is still up to his self-glorifying antics: Interestingly, Mr Stevens of the RBA reckons it was all done so we could borrow more money: Now when the only entities that are guaranteed to make money from more borrowing are the Banks that lend, isn't he just saying the rate cut was "necessary in order to deliver the appropriate level of [bank profits]." Yet the banks say they don't even rely on borrowing money from the RBA to lend into the economy but have funding costs and therefore profits, that are determined by the off-shore conditions of foreign interest rates and relative AUD currency value. So when Mr Swan claims the glory from decisions Mr Stevens makes and the Banks that Mr Stevens serves admit his decisions are largely irrelevent, what does that mean for us who appear to be dependenty on these two? By the by:
Nah, Swan claimed it: Http://www.abc.net.au/news/2012-05-01/fiscal-policy-behind-rate-cuts-swan/3983500 Makes me a bit nauseous... Edit: beat me to it Gino
Mmmm, wonder if he'll take credit for the economic indicators that led to the rate cut in the first place? :/ It makes me nauseous as well Dogmatix.
[youtube]http://www.youtube.com/watch?v=PtEyAe1QqCg[/youtube] This man is responsible for our economy. We are doomed.
You're making the mistake of thinking the money is yours. It isn't - its the Reserve Bank's money. It has their name on it and everything. They just let you use it*. * Usage of Australian currency is subject to the Reserve Bank's Terms & Conditions which may be revised on the first Tuesday of each calendar month and from time to time thereafter.
