InterPrac Leasing Newsletter-June 2008
Some mixed comments about the RBA Cash Rate. Interesting nonetheless.
The Reserve Bank’s minutes for this month’s meeting showed members considered a ‘rates-on-hold’ decision as appropriate this month given that, on current policy settings, the necessary moderation in demand growth (which would act in the opposing direction of inflationary pressures) “was likely to occur”. Members also noted “considerable uncertainty in the forecasts for demand and inflation”. (St George Bank Newsletter 18/0608)
HIGH RATES SHOCKER
In the few days since the Reserve Bank of Australia (RBA) governor gave his speech on the need for continued high interest rates, the financial community has been screaming the warnings. The governor clearly stated the on-going resources boom would continue to fuel inflation and so the RBA would maintain its hardline policy of high interest rates. One prominent economic commentator described the position as the worst news the Australian economy could have this year.
PETROL TIME BOMB
Economists have done the maths and all agree Australia along with most Western economies will be hit hard if the cost of oil continues to rise at anything like its present rate. Many point to the way the cost per barrel was just $50 a few years ago when predictions of $100 were considered silly.
Now respected international commentators, Goldman Sachs, insist $200 is well within reach sooner rather than later. And as we all saw last year when oil shot past the $100 price, the on-cost into our domestic inflation (mainly food) was a leading driver for the RBA lifting interest rates. So adding this petrol flow-on factor to the effects of the resources boom our economy is inevitably in for a very bumpy ride for at least the near term.
AND NOW THE BAD NEWS
For the first time in a couple of years, the number of employed people in Australia has fallen. The shift may be small, but it is nevertheless a reversal of the strong recent trend. Certainly consumer confidence is now taking a battering with the latest figures putting it down nearly 30 percent over a year ago and arguably the lowest since 1992. Most people continue to point to high petrol prices as the main reason leading their general economic gloom. And to no one’s surprise, the rate of new home loans is the lowest in years with the vital building industry screaming crisis.
RETAIL NOT TOO BAD
The latest retail spending figures are holding up better than most economists forecasted. Observers are now saying the next few months will give more of a slowdown rather than the predicted meltdown. Even normally conservative Access Economics have come out in their latest study and said consumer spending won¹t be as bad as most were expecting. (Oxford Newsletter 19/6/087)
Yours Sincerely
Djamel Chettibi
National Leasing Manager
InterPrac Finance
Services Pty Ltd
Ph: 1800 700 666
Fax: 1300 361 587
www.interprac.com.au