Maria Santa B.A.

RBA raises rates in May

21 posts in this topic

They fired their three-shooter. (Yeah yeah they had a six-shooter once, but years ago they threw it in the Yarra when they were scared one day.)

http://www.theaustra...6-1225862097084

Reserve Bank lifts interest rates by 25 basis points to 4.5pc

Scott Murdoch From: The Australian May 04, 2010 2:30PM

THE Reserve Bank of Australia delivered homeowners the sixth interest rate rise in eight months today, as the domestic economy remained one of the best performing in the world.

The central bank's decision to increase the official cash rate by 25 basis points to 4.5 per cent came just one week before the Rudd government releases its election-year budget.

Retail banks are now expected to follow suit and pass on the increase to borrowers.

The financial markets had judged that there was a 75 per cent probability that the RBA would hike rates at its meeting in Melbourne today. The expectation of a May rate rise had jumped after official data yesterday showed a 20 per cent surge in house prices in the past year.

Figures from the Australian Bureau of Statistics showed house prices rose 20 per cent during the year to March, the fastest pace recorded by the bureau since the series began in 2002. The national rise in house prices for the quarter was 4.8 per cent.

Melbourne topped the house-price growth, with a 6.7 per cent rise over the quarter, followed by Sydney, with an increase of 5.3 per cent. Markets are much cooler in other state capitals, with rises of between 2 per cent in Brisbane and 3.5 per cent in Perth.

Edited by Maria Santa B.A.

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F_ck me.

Well, now things are getting interesting! :thumbsup:

Each time the rates go up I pull cash out of other investments and put it into my offset. Guaranteed tax free return of some 6.5% soon with any luck.

Wonder if any other mortgage people are doing the same.

Unfortunately it means I no longer have pretty graphs to look at on the weekends :)

Edited by tor

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Removed post. The stupidity of my comment only occurred to me after posting :) It must have been the beer I was just drinking.

Edited by crashe

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But why Daryl Braithwaite? And where would you get three geese at this time of night? :dontgetit:

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I suffer from a severe case of Schadenfraude. Each month on a Tuesday I take such pleasure at reading the news.com.au comments.

Well done Stevens.

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Removed post. The stupidity of my comment only occurred to me after posting :) It must have been the beer I was just drinking.

Beer is good!

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They fired their three-shooter. (Yeah yeah they had a six-shooter once, but years ago they threw it in the Yarra when they were scared one day.)

http://www.theaustra...6-1225862097084

Unfortunately I have the feeling than all the tools who are complaining about this reckless rate increase and this "New mortgage stress" will get "bailout" one way or another :-(

My money is on a pause or drop of Interest rate if the overseas mess get worst.

btw, can someone explain to me why Banks have to pass the interest rates since most of them get a large part of their funding on the overseas market ?

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...btw, can someone explain to me why Banks have to pass the interest rates since most of them get a large part of their funding on the overseas market ?

Because rates are going up. Your argument only holds water when rates are going down :)

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Because rates are going up. Your argument only holds water when rates are going down :)

It's why we see the banks match the RBA on increases but any decreases they meet the RBA halfway.

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Unfortunately I have the feeling than all the tools who are complaining about this reckless rate increase and this "New mortgage stress" will get "bailout" one way or another :-(

My money is on a pause or drop of Interest rate if the overseas mess get worst.

btw, can someone explain to me why Banks have to pass the interest rates since most of them get a large part of their funding on the overseas market ?

I am no currency trader but as I understand it:

Because they are borrowing in AUD not in US or GBP.

They could borrow in $US at cheaper rates but take on currency risk. This is not their business.

If they want to borrow in AUD they have to pay the official rate or above the official rate to attract funding over the Australian government.

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Nice.

While it is only a parody, it would seem that everyone with a clue of economics is starting to rally behind the right team on reform in housing.

Now it is only the economists working for vested interests who continue to espouse an agenda which only sees us delay the inevitable pain and of course the politicians who listen to them.

Ken Henry untill this review was not my favourite treasury boss but he has won me and I now realise when he was sayign the fiscal stimulous was balanced he really had no choice, did he?

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Ken Henry untill this review was not my favourite treasury boss but he has won me and I now realise when he was sayign the fiscal stimulous was balanced he really had no choice, did he?

I feel he has good intentions but he always stops short of the ultimate potential. Just look at his proposed income tax brackets. They are a joke. We live in a computer age where you can literally apply ten tax brackets with ease and the guy reduces them to three. His three-bracket proposal lacks any presence of "deviation from the minimum living income" and "deviation from the mean income" approach to income.

It once again targets the lowest common denominator in thinking. It shows he tries to establish a system all people can understand instead of a system all people can benefit from. In most cases the system that benefits all people is not understood by most people. He talks about "complexity because the income tax rates scale" today. If that is complex to understand then we have no chance in hell to survive as a species. The tax scales are applied behind the scenes so it doesn't actually cause any complexity which means we should have more tax brackets and not less.

Ken Henry's income tax proposal gives short-term relief for low income earners in exchange for long-term assurance to tilt income tax pressures on low income and middle income earners via inflation. Once wage inflation hits that income tax free threshold will be eroded and you suddenly have low income earners pay 35% income tax and high income earners pay 45% income tax. His proposal has a high risk of losing its progressive character because he eliminates tax brackets.

That is a lot of words for saying "Ken Henry is a mediocre economist".

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You'll get a lot of bracket creep with more brackets.

If my marginal tax rate goes up by a few cents every few years I'd be looking at tax minimisation structures (property, trust funds, incorporating etc).

I'm already looking into the appropriate incorporated structure for my trading activities to take advantage of lower corporate tax rates and high private marginal rates.

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I always hear people say: "But if you do that I will do the following to avoid it." That doesn't mean it shouldn't be done and followed up with another measure to close down the avoidance. I have noticed people always find an excuse to not do something in Australia.

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I always hear people say: "But if you do that I will do the following to avoid it." That doesn't mean it shouldn't be done and followed up with another measure to close down the avoidance. I have noticed people always find an excuse to not do something in Australia.

You also hear "Let's just do it, I can fix it later" in Australia a lot

Hey, that is the exact opposite of the stereotype you used.

In point of fact I have heard lots of both of those in all 4 countries I have spent any serious time in.

Neither of them are a valid argument for action or inaction.

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I always hear people say: "But if you do that I will do the following to avoid it." That doesn't mean it shouldn't be done and followed up with another measure to close down the avoidance. I have noticed people always find an excuse to not do something in Australia.

Because its a welfare state and our taxes are often wasted (FHO rebates, School canteens at $13K a m2, bungled defence projects etc etc). When you pay over $50K in income tax a year, you want bang for your buck. I was more than willing to pay my share for the law and order, defence etc but public expenditure is now a disgrace.

another measure to close down the avoidance

Thats the mindset that has us in a position of having over 125 taxes in Australia in a feeble attempt to plug the holes.

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You also hear "Let's just do it, I can fix it later" in Australia a lot

Hey, that is the exact opposite of the stereotype you used.

It may be in some instances. It most cases the avoidance or follow-up problem is smaller than the original problem you are wishing to solve so I don't see a point in delaying the fix of a big problem if it opens up a smaller problem.

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Lets get to 150 taxes, 125 is not enough.

These morons couldn't plug a hole in a bucket with 4 rolls of duct tape and an industrial tube of silastic. Accountacy is the No1 easy money, high paid graduate work.

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...Accountacy is the No1 easy money, high paid graduate work.

My accountant offered me a job after going through doing my taxes a fortnight back. She thought my understanding of the rules and methods was excellent and that my database was a brilliant product so she said when I am next looking for work she'll take me on.

Not a good sign really as that means my 6th form accountancy class with no experience has made me faintly competitive in that market.

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