Just confirmed the rate is now at 1.5%
What are your thoughts? Whats the impact?
RBA cuts the cash rate to all-time low of 1.5% - what are your thoughts?
LoCure on 02/08/2016 - 14:53
Last edited 02/08/2016 - 14:53
Last edited 02/08/2016 - 14:53
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What's your reasoning?
Presumably something like: lower interest rates -> lower cost of borrowing -> increased borrowing -> more demand and purchasing power -> high prices.
don't forget banks have also tighten borrowing
Happy.
I'll be so disappointed if my loan shark doesn't pass on the benefit…
which bank are u with
I use a guy call Dino. He hussles and rackets around Broadmeadows and his cousin Vinnie operates out of Bankstown… :P
There is a lawyers office on Pascoe Vale Rd in Broadie that is at the back of the Caltex service station. Looks really dodgy and I reckon Dino could be working out of here.
Spelt Deano. Where's the respect ;-}
Well I just purchased my first house, but the market is a little more sane over here in WA and I think I got it for a good price. Only a smallish loan as I had a fair bit of a deposit, got a little sick of barely getting any return on the money I'd saved haha.
Well being a self-funded retiree who is too young for a pension….IT SUCKS. I use to be able to live frugally on my investments but now I get nothing and for the last couple of years I live well below the poverty line.
Why not go back to work for some extra cash?
Just hang in there for a bit longer. The temptation is to take on more risk to increase your yield. However, the last thing you want to do is shift your assets into riskier investments and then watch as interest rates rise, which could cause some capital loss.
Savers are being strip-mined to hold up a wobbly indebted house of cards. In a normal environment, those who over-borrowed or made poor investment decisions would be subject to market forces. But, not atm. An economy which rewards and protects poor investment decisions will lead to even more poor investment outcomes and greater problems in future as an entire generation comes to believe that the RBA will protect them from losses. Whereas savers are being punished for behaving rationally during a period of great economic volatility. This is highly unlikely to end well.
Keep blowing that bubble that was supposed to be bursting already…
Baby I never burst. So keep blowing…
Call +61 2 9551 8111.
Which poor chaps number is this?
So any signs of savings rate change? I'm betting they'll put them up :-}
Looks like I was right. At least no % drop.
WHAT ABOUT SELF FUNDED RETIREES OR OTHERS WHO DON'T GET A GOVERNMENT PENSION NO THOUGHT OR HELP BY THIS
OR OTHER GOVERNMENTS.THOSE ON LOW HEALTH CARD INCOMES GET NOTHING.HAVING WORKED HARD ALL OF MY LIFE PUTTING
SUPER AWAY WHILE OTHERE GAMBLE.BINGO,SMOKE DRINK ALCOHOL GET A FULL PENSION. OR EVEN OTHERS REFUGEES ECT
GET THE FULL PENSION. TALK ABOUT THE LUCKY COUNTRY MAYBE FOR SOME BUT NOT FOR OTHERS.
Why are you shouting?
Seems angry that self-funded retirees don't qualify for a pension because they have too much money.
I'm sure most pensioners would love to be in that position instead.
This is a shocker. Putting it into stocks is a gamble. I feel for you. You got a right to shout!!!
A major economic crash is highly likely soon. Cutting the interest rates just delays it for a bit longer. Once the crash does come homes, financial assets, etc will all go down about 50-70% of their current values, if not more. It will be like what happened during the Great Depression where cash and cash flows are seen as the most important to weather the storm. Assets will sell for a steal, but people won't buy because they want to hold their cash. But don't keep your cash in a bank, because Australia adopted bail-in laws meaning if your bank starts crashing they will confiscate your savings to stay afloat.
So, where would you keep your cash?
Under the mattress
no offense but this is utter garbage.
Look at what happened to Cyprus. One night the people went to sleep happy with their money in the bank, the next a bank holiday was declared and extended until the EU worked out what percentage of cash the banks could steal from people's bank accounts to stay afloat. That is now a template for how the governments of the world will deal with the next crash. Do some research, and you'll find that we're in the beginnings of a deflationary collapse along the lines of the Great Depression, but worse. The central banks and governments are desperately trying to kick the can as far down the road as they can (QE was just one example), but they're running out of things they can do. Official interest rates all around the world will eventually go negative, meaning you pay to store your cash at a bank instead of getting a return. They're pushing for a cashless society so people's money gets trapped in the banking system and they can take however much they want out of it. If there's no physical cash then people can't take their money out and hide it away like people did in the Great Depression when nobody trusted the banks to stay solvent.
alright, so most of the comments are either jokes, or bad predictions.
surely RBA consists of smartest people in the country.
what are the good points about low rate that could affect our daily life NOW? serious answers only pleaseLow interest rates steal money from savers and give it to gamblers. I think most OzB would be in the former category, so not many good points for OzB.
Main good point is the hope to stimulate spending with the savings from the rate cut, thus boosting inflation and the economy. Boosting the economy equates to more jobs, pay rises, better job security etc etc.
If you wish to discuss the current interest rate movements through the prism of a first yr undergrad textbook, then sure, it will bring increased consumption, lower dollar, blah, blah, blah. As they have been saying for the last umpteenth cuts.
IMO, to discuss monetary policy without a clear understanding of financial capitalism, political economy and rentseeking is facile.
surely RBA consists of smartest people in the country
That's an assumption. Can we please see the hiring criteria to verify?
Back after the GFC Rudd said we had an "emergency cash rate" of 3%, lol.
What does that make the current 1.5% then, "OMG disaster"?
Time for some new economic theory, 2-3% inflation target is but a distant memory.
Interest rates on CC still around 20%, nice 18% nett for Visa et al!Definition of insanity: Doing something over and over again expecting to get a different result every time.
It's great, now I can borrow another million for an apartment in Melbourne cbd and have low payments! (sarcasm)
Then 22% in 2022.
Great news for savers as rates go UP, not down!
I just posted it here: https://www.ozbargain.com.au/node/260052Australia is a nation that rewards people who take on debt and punishes people with savings. We don't have enough savings in this country to cover o/s mortgages and other debt, hence the massive shortfall is borrowed from overseas countries like China, Japan, Germany, Middle East who have excess savings. The situation has actually worsened since the GFC as Australia has not learnt from that dire predicament. Many Australians are unaware that the Australian Govt was the 2nd Govt in the world (after bankrupt Ireland)to guarantee their banks funding arrangements.
God help us when the next GFC comes along because we will be in deeper trouble this time. No thanks to Kevin Rudd and Wayne Swan.We, the retirees who have savings and term deposits accounts in the banks are the victims of RBA ‘s lowering interest rate. Many of us turn to buy listed shares hoping to get more return in form of dividend which yield around 6 % p.a. The danger is we may loss our entire capital if one day the share market crashes. If it happens then more will seek government welfare.
Yeah, oldies with savings are copping it. The outlook medium-term doesn't look any better (for the entire western world nations).
I sympathize that the govt has no support plan for the situation they create for retirees.
You know you just replied to a 3 year old thread?
Yes, it's easy to make that mistake. I replied to it anyway as it's a big concern for a lot of people living off of their savings interest.
Philip Lowe is a tool. Everyone can see the recession coming a mile away and yet he tells us gullible Australians “We did not expect this slowdown, so it has come as a bit of a surprise”. Additionally he's fretting over "low" inflation rates while housing, fuel, basic necessities and health insurances premiums rises exponentially during his time. Literally any half arsed economics undergrad can play down/up with interest rates and yet the media protrays him as a saviour of us plebs.
Or does he actually have a vested interest in protecting the assets of his banking mates so he can retire into a cushy role post-public service like our former defence minister Christopher Pyne?
What recession?
Glad you could join us Philip.
Additionally he's fretting over "low" inflation rates while housing, fuel, basic necessities and health insurances premiums rises exponentially during his time.
I can't remember the last time I said to myself "this price decrease will help my family a lot. Thanks X!" Every single thing is going up in price.
Grocery prices up (packaging sizes down).
Australia Post prices up.
Fuel prices up.
Our amazing new NBN Internet prices up.
Wages down or stagnant. Record high casual/part time positions/record low full-time positions.
Even the lowering of the interest rate is just a price increase in disguise for future home buyers. Good for the minority population who already have a home loan. Bad for 99% of the rest of Australians.
And of course bad for anyone who has savings of any amount.Sh*ts (profanity) and the recession will hit us big time.
This post was meant to go on the other RBA thread. Blame the people above.
I feel people like to complain a lot instead of taking some initiative in their life. If they don't like their job and want a payrise - then get up off your… and move. When interest rates were higher I remember people complaining that they wanted lower interest rates to pay less on their mortgage, now they are lower everyone that spends is a gambler?! and savers are being punished?! You are where you are because you choose to be, the govt isn't forcing you to have your money in savings. You choose what you do with your money.
By cutting interest rates, the RBA is forcing everyday moms and dads and pensioners into dumping their savings into riskier investments like the ASX and property where the bubbles are already forming. It is highly irresponsible of a central bank to indirectly use retirees savings to prop up ailing stocks with lopsided PEs and a precarious property market. Whats going to happen to these average Australians when the global recession hits and the bubble finally pops?
everyday mums and dads 5-10 years ago were all buying 2 or 3 properties on top of the ones they owned as the market was booming and they got lucky and now have 3 properties mostly paid off. Am I supposed to now feel sorry for everyday mum and dads because their 1 million in the bank isn't getting 5% interest per month and they have to look at other avenues? SMH
How about a compromise: mums and dads (baby boomers) get 1% per interest on their savings. New home buyers get 10% interest.
Yes, government should think carefully what about those self funded retirees or part taking pensioners who depend on their bank savings. By pushing them to other sources of getting more incomes to supplement their living expenses, most tend going to invest in share market equity, As there is already of recession clips in soon, they may lose their entire or most of their savings. This will only push more to look for government aids in form of welfare payments.
govt isn't forcing anyone to do anything. retirees with their 3 properties will now be forced to sell one of them. Sooner they are out of the market and allow the next generation in, the better.
You're being facile if you think by inflating the housing bubble Philip Lowe wants our youths to be able to afford their own homes. Even the proposed FHOG they are supposed to get will just inflate housing prices even more and line the pockets of Philip's banking and real estate mates.
I don't believe it's as simple as that. You're looking at it with only that line of sight. Everyone deserves their fair go if they are honest and hard working.
Everyone in the present just looks at their current situation and subjectively want the best for their world only, it's human nature. When you were 20 years younger you took a different mindset, when you are 20 years older you will take a different mindset of what you think should happen to benefit yourself the most..
Inflating the housing bubble more.