Inflation is low and remains low

Thu, 27 Apr 2017  |  

This article first appeared on the Yahoo7 Finance website at this link: 


Inflation is low and remains low

Inflation edged up a little in the March quarter – from an annual rate of 1.5 per cent at the end of 2016, the headline rate rose to 2.1 per cent. The underlying rate of inflation, which the RBA trends to place more weight on when it comes to assessments of interest rate policy, was even more muted, lifting from 1.5 per cent to 1.8 per cent.

And recall, the RBA target range for inflation is between 2 and 3 per cent.

Annual underlying inflation has been at or below 2 per cent since late 2015, and has been below 2.5 per cent, the midpoint of the inflation target, since the end of 2014. That is a long time.

The data today confirm that inflation is low and remains low and in isolation, continues to give the RBA plenty of scope to further reduce interest rates. When the recent data on unemployment, building approvals, private sector business investment and wages growth are added to the mix, the case for an interest rate cut is strong.

“Strong”, that is, except for two items – the boom in house prices in Sydney and Melbourne is a thorn in the side of the RBA, and signs that the global economy is performing well is good news because it should provide a boost to the Australian economy if it is sustained for the next year or more.

Importantly, the inflation outlook remains skewed firmly to the low side. Even the RBA is forecasting inflation to stay around 2 per cent right through to the end of 2018 which if correct, means its interest rate policy bias is towards cutting interest rates especially if, or rather when, the heat in Sydney and Melbourne house prices starts to fade.

On that score, there is plenty to suggest housing is about to weaken. The extension of regulatory changes to lenders will crimp demand, particularly from investors. The pending supply deluge will also work to dampen prices, especially in the second half of 2017 and into 2018. Add to that, some bank-initiated hikes in mortgage interest rates and the stars are aligning for the housing market to hit the wall, at least in terms of price changes.

Already there are some signs of a cooling in housing. While there is a seasonal pattern to house prices, the recent Corelogic series points to prices edging lower in Sydney and topping out in Melbourne. Weakness over the next few months, while welcome, could be problematic if it goes too far or builds momentum.

Globally, inflation is well contained. This is important for the Australian economy which is closely linked to global economic trends. There was a clear lift in price pressures late 2016 and early 2017 largely on the back of the rising price of oil and other commodities but these have clearly reversed in the most recent data.

All of which suggests that Australia’s next inflation reading will be lower and with that, the pressure will remain on the RBA to cut interest rates. If this coincides with clear evidence of a weakening in house prices, the next interest rate cut could be delivered in August or September.

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Wed, 29 Jul 2020



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*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:   


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.