Joe Hockey and emergency interest rates

Mon, 05 Jan 2015  |  

When it was elected in September 2013, the Coalition inherited the RBA's monetary policy settings that were framed around a 2.5 per cent official cash rate.

In all of the 486 days since the election, the cash rate has been set at 2.5 per cent and as 2015 kicks off, the futures market is pricing in a strong probability that rate will fall to 2.0 per cent within a year.

When, in August 2013, the RBA cut official interest rates to 2.5 per cent and Mr Hockey was Shadow Treasurer, he made the following points in an interview with Leigh Sales on the ABC's 730 program about the RBA and its monetary policy settings:

"they're not cutting interest rates because the economy is doing well. Interest rates are being cut to 50 year lows because the economy is struggling."

"if your argument is that the lower the interest rates the better the economy, go and ask the British or the Americans or the Europeans that have interest rates at zero how their economies are going because I tell you what, we are now beyond emergency levels."

"if anyone thinks that the Reserve Bank acted today because the economy is doing really well, and Labor's doing a terrific job running the economy, they'd be deluding themselves."

Let's assume the futures market is correct and the cash rate is cut to 2.25 per cent within the next few months and then 2.0 per cent a little after that.

Will Mr Hockey say:

"they're not cutting interest rates because the economy is doing well. Interest rates are being cut to 50 year lows because the economy is struggling." [A 2.0 per cent cash rate in early 2016 would be a 55 year low.]

"if your argument is that the lower the interest rates the better the economy, go and ask the British or the Americans or the Europeans that have interest rates at zero how their economies are going because I tell you what, we are now beyond emergency levels."

"if anyone thinks that the Reserve Bank acted today because the economy is doing really well, and the Coalition's doing a terrific job running the economy, they'd be deluding themselves."

Just wondering.

comments powered by Disqus

THE LATEST FROM THE KOUK

CLIMBING THE COVID MOUNTAIN

Wed, 29 Jul 2020

TEN ECONOMIC STEPS THAT FORM A PATHWAY TO THE TOP

THEKOUK and EVERALDATLARGE OUTLINE A WAY FOR THE PEOPLE OF AUSTRALIA TO CREATE AND MAINTAIN SUSTAINED PROSPERITY

Covid19 has opened a door for Australians to positively accept significant changes that will lead to a shared good. This rare opportunity enables us to achieve sustainable economic and social goals that create a new ‘normal’ as our way of life.

These Ten Steps are presented as non-partisan recommendations to the Australian Parliament in the firm belief that, if they embrace them, the Australian economy and society will be greatly enhanced after the Covid19 pandemic has passed.

*A job for you if you want one.
A significant increase in part time and casual employment can be created that will enable you to enjoy a more creative and peaceful lifestyle and to live longer and better. The traditional age at which you would have been expected to retire will become obsolete as a result. An access age for pension and superannuation will become your choice. This will enable you to remain in paid work for as long as you want to, on a basis that you choose, while boosting the productivity and growth of Australia.

*You will get wage increases that will be greater than your cost of living.
A demand for enhanced innovative skills at all levels of employment will be created as the economy grows in strength, thereby enhancing your stature in the workforce and enabling executive salaries and bonuses to drop to levels that are accepted as justifiable by employees, shareholders and customers.

The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

Tue, 07 Jan 2020

This article first appeared on the Yahoo Finance web site at this link: https://au.finance.yahoo.com/news/the-governments-test-in-2020-220310427.html   

---------------------------- 

The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

For many people, the cost of the fires is immeasurable. 

Or irrelevant. 

They have lost loved ones, precious possessions, businesses and dreams and for these people, what lies ahead is bleak.

Life has changed forever.

As the fires continue to ravage through huge tracts of land, destroying yet more houses, more property, incinerating livestock herds, hundreds of millions of wildlife, birds and burning millions of hectares of forests, it is important to think about the plans for what lies ahead.

The rebuilding task will be huge.

Several thousands of houses, commercial buildings and infrastructure will require billions of dollars and thousands of workers to rebuild. Then there are the furniture and fittings for these buildings – carpets, fridges, washing machines, clothes, lounges, dining tables, TVs and the like will be purchased to restock.

Then there are the thousands of cars and other machinery and equipment that will need to be replaced.