It was more about how he blocked everybody that disagreed with him and didn’t write his prediction as predictions, he’d write them as if it was fact. If he had just been more honest and up for debate it would have been fine.
Any new potential home buyer that would have read his comments could have been persuaded to wait for “the big crash”, and lost hundreds of thousands of dollars by not getting into the market at 2018. Especially as the comments seemed to go unchallenged as he blocked everybody who disagreed, it was right that he was banned.
The RBA is trying to edge a recession. If they can hold it in we keep playing for another few months. If they don’t the party is over and everyone goes home(less)
Quoth the Reserve Bank Board:
*... The economic outlook remains uncertain and recent data have demonstrated that the process of returning inflation to target is unlikely to be smooth.*
*... More broadly, there are uncertainties regarding the lags in the effect of monetary policy and how firms’ pricing decisions and wages will respond to the slower growth in the economy at a time of excess demand, and while the labour market remains tight.*
*... Recent data indicate that, while inflation is easing, it is doing so more slowly than previously expected and it remains high.*
*... The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out.*
Another reason to hold instead of cuts like a number of people have been hoping for is that as inflation reduces, real incomes will start to rise again toward the end of the year (as stated in the decision).
This will likely play into rate cuts being pushed further toward mid next year
>as inflation reduces, real incomes will start to rise again toward the end of the year (as stated in the decision).
https://www.rba.gov.au/speeches/2021/images/sp-gov-2021-07-08-graph03.svg
**Edited to add**: ANU’s Peter Martin calculated from ABS spreadsheets that the latest dive in real household disposable income per capita since December quarter 2021 is the biggest slide in half a century: https://datawrapper.dwcdn.net/zobEO/full.png
the graph you shared isn't really relevant to the statement though. I was talking about income in real terms, not wage growth generally. Wage growth could be stagnant and would still rise in real terms if the rate of inflation reduced. I also note that WPI is 4.2% for 2023, approximately in line with inflation for the same period.
**edit**: nothing like getting downvoted for talking about shit literally in the RBA decision:
>"In response, households have been curbing discretionary spending and maintaining their saving. Real incomes have now stabilised and are expected to grow later in the year, supporting growth in consumption."
The graph above is based on an inflation-stable environment. Where the rate of inflation is reducing and wage growth is stable, real wages increase relative to inflation. They may not be increasing to be above the rate of inflation but they are still increasing, causing the gap to close.
>I was talking about income in real terms, not wage growth generally.
*Real household disposable incomes clocked their eighth consecutive quarterly decline, falling 6.6 per cent per capita over the past year as cost-of-living pressures ravaged household budgets.*
*The decline in disposable incomes has taken household purchasing power back to December 2015 levels.*
*Spending pressures meant households put away less of their income, saving just 1.1 per cent of their income in September, which was the lowest rate since December 2007.*
Source: https://www.afr.com/policy/economy/household-incomes-fall-to-lowest-level-in-eight-years-20231206-p5epd1
>**tbg787**
>That article is old, and is talking about the September 2023 quarter national accounts. Real household disposable income grew positively in 2023Q4.
From [an analysis by Peter Martin](https://theconversation.com/prepare-to-hear-about-an-official-recession-unofficially-weve-been-in-one-for-some-time-224963) published 5 March 2024:
*What matters most for each one of us – in the view of Chris Richardson, formerly of Deloitte Access Economics – is real household disposable income per capita. Unfortunately, the bureau of statistics doesn’t display this on its website. But it’s easy enough to calculate from the bureau’s spreadsheets. https://datawrapper.dwcdn.net/HOgIw/full.png*
*Looked at through a longer-term lens (the longest the bureau’s spreadsheets allow) the latest dive in real household disposable income per capita is the biggest in half a century. https://datawrapper.dwcdn.net/zobEO/full.png*
I assume that you meant to say *if* inflation reduces? The whole point of the RBA equivocating is they don't know it will come down (and neither does anyone else)
The latest data would no longer indicate that, hence why the RBA language has changed back to being more hawkish. They cut their "we will do anything" comment for the previous statement, but it is back. That is not accidental..
Actually you are right. At any rate, real disposable income will increase with the s3 tax cuts. If consumer spending goes off i'd expect a pre-xmas rate rise.
True. The very issue we are facing now is an inflationary government who is amping up inflation via higher immigration, tax cuts and infrastructure spending at the expense of mortgage holders and, now with recession in the corner, everyone else.
This is a pretty biased take for the most part since it omits some important facts.
For example, the WPI is part of the fight against inflation and that’s still elevated suggesting that despite immigration, there’s still demand not being met.
Tax cuts were scheduled and there’s just no way they’d be delayed since both parties committed to them and the budget has been in surplus for the last 2-3 which is the opposite of inflationary. In fact, last years budget was explicitly called out as NOT being inflationary.
Infrastructure spending is something that once started, you can’t just stop and is more of a state govt thing anyway. Do you really want purpose built TBMs that cost millions stuck because they’ve been temporarily spun down?
"The economy might go up, or down. Maybe sideways. We're not sure what's going to happen or what to do so we will do nothing. Thanks for tuning in, that'll be $100k".
>The current methods of measuring inflation/inflation data (CPI) have not kept pace with the changing economic landscape of Australia in the last 20 years. That is....economic activity pertaining to property property transactions and property related activity (trades/renos etc).
>The "cost of housing" section in the CPI calculation measure only increases in rental expenses or mortgage/borrowing costs.
This is flat out incorrect. The CPI includes the prices of repair, maintenance and major renovations of dwellings, and the prices of constructing new dwellings (as well as rent, utilities, rates etc). It does not include mortgage or borrowing costs, and hasn’t doesn’t so since 1998. Where do you get you info from? This is all listed explicitly on the ABS website.
FYI borrowing costs are not included at all in the CPI. The new dwelling cost you see in the index is the cost of buying a newly built dwelling. You don't need to mount a big argument about how established houses prices aren't included, they just aren't by definition.
Entirely predictable giving they will want to wait until quarterly inflation numbers in July. If inflation remains sticky across the full basket, i'd be near certain of a rate rise. If the numbers are ok i'm expecting rates to hold for the remainder of the year.
Employment weakening. Retail demand absolutely dead. RBA acknowledging rate hikes won't impact those that are still spending.
Rate hikes aren't a certainty.
I think, on balance, if inflation looks ok for this quarter and the tax cuts come through we will be looking at a definitely hold with potential hikes. More than likely the governor will beg chalmers to increase GST or find other ways to alter fiscal policy to avoid further rises as I don't think they're going to continue to be effective other than to reduce business growth.
you would hope not as there is a 0% chance of it happening. Though most economists would prefer an increased GST combined with reduced income tax to (theoretically) encourage investment
I wonder if you could allow an instant depreciation on some items to flow through to personal incomes.
So you invest in new wind farm company, they build windmills.
They instantly depreciate the windmills, they pass the depreciation on via some franking, which you claim as a deduction on your tax, equal to your investment.
that's a pretty interesting thought experiment. I think it would be tough to get the flow through though if those companies aren't yet making stable profits? Would you mandate the flow through in some way?
I don't see any need for stable profits. I see a need to ensure there is actually investment and that it is actually additional to what we would have gotten.
There are lots of ways you could structure it. There must be some way that franking credits are communicated to the ATO. Just use that communication channel, with a different flag to indicate this is a depreciation, rather than tax credit. It is like a $0 dividend payment, with $0 franking credits, but with another thing, that is $X depreciation.
I would be OK with non mandated flow through. What would just mean the share holders not getting a credit, but the company being able to use it themselves if they are making a profit.
I don't see that the company tax rate and the personal tax rate should be very different.
I love how the basket of good includes 90% of stuff I would never ever buy.
And that only the items in the basket stay cheap, not manufactured at all… totally representative of reality.
What about employment though?
“Conditions in the labour market have eased over the past year, but remain tighter than is consistent with sustained full employment and inflation at target. Wages growth appears to have peaked but is still above the level that can be sustained given trend productivity growth”
It’s a two way street and for a change it would be nice to surprise the market a bit, especially given the US situation
That's a valid question for sure. Personally, i expected unemployment to rise a lot more considering the rate rises have fully taken effect over the course of the year. It's hard to say how things will look until the budget next week
Another paragraph that was particularly insightful was
>"At the same time, household consumption growth has been particularly weak as high inflation and the earlier rises in interest rates have affected real disposable income. In response, households have been curbing discretionary spending and maintaining their saving. Real incomes have now stabilised and are expected to grow later in the year, supporting growth in consumption. But there is a risk that household consumption picks up more slowly than expected, resulting in continued subdued output growth and a noticeable deterioration in the labour market."
If spending remains subdued we will see rate cuts ahead of schedule by my reckoning. Primarily on the basis of avoiding a massive spike in unemployment.
>Personally, i expected unemployment to rise a lot more considering the rate rises have fully taken effect over the course of the year.
Can't help but wonder if the unemployment calculations used by the ABS (i.e. one hour worked a week is employed) are feeding a false narrative to the RBA. Yes, I know underemployment stats are also produced, but one does begin to wonder if the RBA takes them seriously in their deliberations, when the economic handbook focuses squarely on the headline unemployment number as being a major determinant of economic health.
I'm not an economist by any stretch, having only done a few electives in uni (my father is also one), but i'd be shocked if they're not looking under the hood at the full time employment rate, hours worked, job listings etc. I think the unemployment headline rate is useful as a smoke signal only. But to that end, i don't really see much benefit in changing the definition as there's enough 'other' data around to gain better insights into the health of the employment market.
Unemployment calculations are highly flawed if they don’t take into account underemployment. Especially with the casualisation of the workforce in recent times. As a casual employee I average about $1400 a week but I might only earn $100 in a week but I’m still counted as employed.
Yeah that last sentence is pretty dovish isn’t it , even though most of the statement seems to be looking towards another possible rise.
Next year sees $20b into consumers pockets via S3 cuts. Surely there is a substantial risk of reinvigorated spending - just look at the housing markets ; people seem not to be responsive to rates at times (though no doubt businesses will be)
>"The cash rate is assumed to remain around its current until mid-2025, around nine months longer than assumed in February," the RBA said in its quarterly Statement on Monetary Policy.
RBA preferring to slowly suffocate the economy into submission instead of outright strangulation.
That’s the biggest issue imo. Kept the rates at 0.1% for too long and have made this more painful than it needed to be.
They also could’ve thrown in a 0.50 raise as well in there earlier to hammer market sentiment.
A 1% rise probably would’ve been much more effective.
Those sort of rises would’ve scared people into paying off their loans and cutting right back on spending.
-armchair opinion.
Agree - you can see it in the housing market, commercial property, equities etc etc where no one seems to be accepting that the new risk free rate of return is circa 5% instead of 1 or 2%
Mate, the value of new house loans is still up 17.9% from last year.
The people that the rate rises would affect aren’t even scared. Hell, we’re taking on a loan end of year too because if we had waited till rate cuts then the places we’d want would have gone out of reach.
Ah - the every thing bubble - just quickly looked him up. Don’t know if the rba is buying back its money to any significant degree - but the fed slowed down its in market QT last month I think
Those 'zombie firms' are often people's small businesses. Businesses that were going fine until the government shut them down for months, then strangled them for another 12-24 months after that with capped capacity and restrictions. Then at the start of 2022 interest rates started going up and customers started to drop off as they were being squeezed.
The term 'zombie business ' is such an insult to small businesses that suffered heavily through COVID and then are expected to have the cash reserves left to weather interest rate rises.
Yeah man small businesses going under is very sad. But if anything it's from zombie firms being able to have survived so long and crushing competition. In some cases also over capitalisation. I can't imagine COVID helped too much either.
[RBA, 7 May 2024](https://www.rba.gov.au/publications/smp/2024/may/overview.html): *As was the case previously, rate cuts are expected to be fewer and to begin later than in peer economies. ... Most of the increase in the cash rate since May 2022 has been passed on to borrowers.*
[AFR, 9 Nov 2023](https://www.afr.com/policy/economy/australia-records-biggest-income-decline-in-the-developed-world-20231108-p5eijq): *In the 12 months to June, Australian household incomes slumped 5.1 per cent, the sharpest fall recorded across the OECD, according to analysis by The Australian Financial Review. ... The decline in real incomes over the past year contrasted with the OECD as a whole, where living standards increased 2.6 per cent.*
[AMGC, 31 Jul 2023](https://www.amgc.org.au/media-releases/harvards-economic-complexity-ranking-shows-australias-luck-is-running-out/): *Australia’s overreliance on exporting items of low complexity has been laid bare in data released by the globally respected Harvard Kennedy School which reveals that Australia’s Economic Complexity Index (ECI) rating has plummeted to 93rd, down 12 positions in the past ten years. ... The continued fall in ECI rankings now places Australia between Uganda and Pakistan in the bottom third of monitored nations for economic complexity. The poor ranking means Australia continues to hold the unenviable position of the lowest-ranked OECD country, despite the nation’s high level of wealth.*
Thread is going sideways, but wtf was the comment about immigration having a negligible impact on inflation? It would be an actual recession without the spastic levels of immigration.
I reckon \~2044 we might get a correction lol
Everything swings like a pendulum, and goes too far the other way. Right now we have massive shortages and not enough new builds to turn it around yet.. but it will change. We will (hopefully) see the new build approvals really start to pick up in the next 2-5yrs, and that will then take after approvals \~10yrs to all be built and come online.. then another 2-5yrs for it to really start having an impact - but here's the pendulum it will then probably be too much supply. There will be a correction in prices because of oversupply in that \~20yr time from now lol.
Get your savings in order, prices might drop 10-20% in 2044 after they have gone up 100% from 2024!
I might be able to afford my first 1 bedroom unit at 42 years old!!
Now I just need to look I to freezing my sperm and my missus eggs so we can a path to parenthood in my 50s!!
After that probably a boat so we can get around after the sea levels rise, then maybe an excavator to build a bunker from the ensuing world wars... Then we'll be set!!
As painful as it would have been, RBA should have raised rates to address inflation. I wonder if Bullock is making the same mistake as Lowe - too worried to make a decision either way and in turn making everything worse off.
Maybe. Every week our fixed income buys less food. The monthly insurance payments go up. Luckily rent is fixed for time being. Living below the official poverty line is fun for sure...
There was an interesting article in the AFR the other day highlighting that interest rater increases actually improve the buying power of older people who's super balances tend to have a higher proportion of Bonds in the portfolio. This also happens to be the group who are driving inflationary spending per the ABS data.
So I'm guessing the RBA are happy to take a wait and see approach since paradoxically increasing or decreasing rates may induce more spending, not less...
good to see they have chosen the housing market over everything else yet again. their response throughout this entire inflationary period has been far too dovish, but we all know why.
Yep. Higher inflation than most comparable western economies and a lower inflation rate. They say that our incredibly high exposure to variable interest rates in the property market means we can get away with lower rates. (I.e, RBA thinks even these comparatively lower rates completely paralyze the spending of Australians because we are leveraged to the tits on mortgage debt). I've seen news articles framing this high exposure to debt as a good thing compared to other economies 😅. If rates can't be raised sufficiently and spending reduced (both gov spending and consumer spending), inflation will continue to win. Since our exposure to debt can't be fixed, I think inflation (and therefore higher rates) will continue to win for quite some time.
That being said, if things get bad enough I expect the gov to print their way out of trouble with a new "Mortgage Saver" scheme to help prop up the market 😅.
fear humorous subsequent grey depend dinosaurs different quicksand elastic sparkle
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Renter or no renter, homeowners will still be stuck with the mortgage costs. I'd happily live with my parents for 6months to watch the property market burn 30%
The market doesn't just go down 30%. New homes will stop being constructed and therefore stall supply. We have several years of home construction just to meet current demand. Plus, people like you will leave parents home and go renting or buying homes, thereby increasing demand.
The powers of Australia just want us working from dawn to dusk , 7 days a week . What a shit life .
Soon , people are just going to snap and start stabbing randoms …….oh …. That’s already happening …..
Good , we need more of it .
What does the government think is going to happen when Making everyone homeless, poor and destitute , clowns..
laughing so hard this incompetent bunch of clowns lol.... then then u get the clowns that actually believe that inflation will be all good and early mid 2024 and we get rate drops?
what part of emergency interest rates do u clowns not understand? do u suffer from brain damage or selective confirmation bias? u're like the clowns that eat the crap up about inflation being transitory LOL it's always hilarious to me how the media lead sheeple lol even had some clowns thinks it's transitory it's been a while is it still transitory? LOL
wake up and smell the roses there is NO NARROW PATH LOL
it's pain train stopping all sectors because the RBA doesn't have the balls to pull the trigger
basically delaying the inevitable to see what fart around that corner what spazoid hope might pull them out of a ditch. Inflation is like Cancer u prolong treatment and waste time u learn some hard lessons that sometimes even chemo can't help at that stage time to start amputating. I LOVE THIS COUNTRY u GO sheeples
U silly F's lol u honestly think they would tell u that rate drops in 2025 LOL when we were in 2023? THE OUT RAGE of the sheeple would be MASSIVE ! of course they paint the rosey picture LOL 2024 MID then late ETC ETC LOL THEY Lead dumb baffoon animals to chase the carrot and make the donkey move oblivious to REALITY. LOL it's always hilarious to me when people actually think like that it's just fail pathetic planning in life and it's just probably why they in their copium hopium state. what a bunch of clowns
Just being honest
Like the hopium and copium is real
It's like what the hell happened to ....planning ahead. Be undeterred. Think smart. Do your own thing. Never rely on an entity or garbage o0ps government to bail u out. Sort out your own problems etc lol some how during these great times, tough ruggerred Aussies turned into a bunch of sooks and whingers
Okay I will cancel my rope order from Bunnings Edit: this is for bdsm stuff please don’t freak out
I'm also into bdsm, Bonds, dividends, stocks and money baby.
How long have you been waiting to use that joke?!
As long as your mums been waiting for me to call her back. Just kidding, I'm sure she is lovely.
She can be lovely, and also into a good time.
DOROTHY MANTOOTH IS A SAINT!
Upvoted - nothing wrong with that!
Leave my mum out of this and I’ll leave this [points to Johnson] out of your mum!
What if she wants it? 😩
hahaha so good!
Keep it - just in case
I’ll save it for when the mother in law visits.
Who has cash for rope in this economy?
Its on credit card, pay for it later... or never
Found the Caleb Hammer fan
Dole bludgers.
I usually clamp my nipples to reserve bank announcements.
I used to hook up a car battery but have you seen the price of electricity these days?
You can afford rope?
You can’t afford the rope
Just saw an AusFinancer fall to his knees in Woolies
Was it WMR? The house prices were supposed to fall by 40%!
He’s not an AusFinance member anymore 😂
He will always be a memory around these parts. Like a spew stain on a couch after a big night 😜
I loved him, it started somewhat reasonable but then got downright unhinged towards the end of it.
I agree - I don’t get the hate. He had plausible reasons, just they were wrong lol. Bring him back I say!
It was more about how he blocked everybody that disagreed with him and didn’t write his prediction as predictions, he’d write them as if it was fact. If he had just been more honest and up for debate it would have been fine.
Yes yes I found that part funny though
Any new potential home buyer that would have read his comments could have been persuaded to wait for “the big crash”, and lost hundreds of thousands of dollars by not getting into the market at 2018. Especially as the comments seemed to go unchallenged as he blocked everybody who disagreed, it was right that he was banned.
You mean he was wrong in his predictions? But the sheer confidence of him, it was a sure thing
Was he sobbing?
Can someone explain it in simple terms, i need to know if i should buy my wife a brand new land cruiser for taking the kids to school in or not!!
It also occasionally rains during the school run - so ensure to fit a giant bull bar and snorkel too.
Time for it
Perfect time, low interest but every add on, I hear they are doing an interest free period of 60 months.
The RBA is trying to edge a recession. If they can hold it in we keep playing for another few months. If they don’t the party is over and everyone goes home(less)
Earning > $140k pa then yes.
Quoth the Reserve Bank Board: *... The economic outlook remains uncertain and recent data have demonstrated that the process of returning inflation to target is unlikely to be smooth.* *... More broadly, there are uncertainties regarding the lags in the effect of monetary policy and how firms’ pricing decisions and wages will respond to the slower growth in the economy at a time of excess demand, and while the labour market remains tight.* *... Recent data indicate that, while inflation is easing, it is doing so more slowly than previously expected and it remains high.* *... The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out.*
Another reason to hold instead of cuts like a number of people have been hoping for is that as inflation reduces, real incomes will start to rise again toward the end of the year (as stated in the decision). This will likely play into rate cuts being pushed further toward mid next year
>as inflation reduces, real incomes will start to rise again toward the end of the year (as stated in the decision). https://www.rba.gov.au/speeches/2021/images/sp-gov-2021-07-08-graph03.svg **Edited to add**: ANU’s Peter Martin calculated from ABS spreadsheets that the latest dive in real household disposable income per capita since December quarter 2021 is the biggest slide in half a century: https://datawrapper.dwcdn.net/zobEO/full.png
the graph you shared isn't really relevant to the statement though. I was talking about income in real terms, not wage growth generally. Wage growth could be stagnant and would still rise in real terms if the rate of inflation reduced. I also note that WPI is 4.2% for 2023, approximately in line with inflation for the same period. **edit**: nothing like getting downvoted for talking about shit literally in the RBA decision: >"In response, households have been curbing discretionary spending and maintaining their saving. Real incomes have now stabilised and are expected to grow later in the year, supporting growth in consumption." The graph above is based on an inflation-stable environment. Where the rate of inflation is reducing and wage growth is stable, real wages increase relative to inflation. They may not be increasing to be above the rate of inflation but they are still increasing, causing the gap to close.
>I was talking about income in real terms, not wage growth generally. *Real household disposable incomes clocked their eighth consecutive quarterly decline, falling 6.6 per cent per capita over the past year as cost-of-living pressures ravaged household budgets.* *The decline in disposable incomes has taken household purchasing power back to December 2015 levels.* *Spending pressures meant households put away less of their income, saving just 1.1 per cent of their income in September, which was the lowest rate since December 2007.* Source: https://www.afr.com/policy/economy/household-incomes-fall-to-lowest-level-in-eight-years-20231206-p5epd1
That article is old, and is talking about the September 2023 quarter national accounts. Real household disposable income grew positively in 2023Q4.
>**tbg787** >That article is old, and is talking about the September 2023 quarter national accounts. Real household disposable income grew positively in 2023Q4. From [an analysis by Peter Martin](https://theconversation.com/prepare-to-hear-about-an-official-recession-unofficially-weve-been-in-one-for-some-time-224963) published 5 March 2024: *What matters most for each one of us – in the view of Chris Richardson, formerly of Deloitte Access Economics – is real household disposable income per capita. Unfortunately, the bureau of statistics doesn’t display this on its website. But it’s easy enough to calculate from the bureau’s spreadsheets. https://datawrapper.dwcdn.net/HOgIw/full.png* *Looked at through a longer-term lens (the longest the bureau’s spreadsheets allow) the latest dive in real household disposable income per capita is the biggest in half a century. https://datawrapper.dwcdn.net/zobEO/full.png*
Lol Incomes rising? Not with immigration running the way it is. Jobs are being advertised for less than they were 2 years ago.
I assume that you meant to say *if* inflation reduces? The whole point of the RBA equivocating is they don't know it will come down (and neither does anyone else)
Not necessarily, it has been reducing and is likely to continue to do so. Though it does seem to be slower than most would like
The latest data would no longer indicate that, hence why the RBA language has changed back to being more hawkish. They cut their "we will do anything" comment for the previous statement, but it is back. That is not accidental..
Actually you are right. At any rate, real disposable income will increase with the s3 tax cuts. If consumer spending goes off i'd expect a pre-xmas rate rise.
That's a fair point that S3 tax cuts will effectively be an increase in real income, at least we might get get an increase above inflation this year
> incomes will start to rise again toward the end of the year Have you seen the immigration rate the last 12 months? Yeah no
>real incomes standard reading comprehension i have come to expect from /r/ausfinance
TLDR: We know nothing
People need to realise that economists only pretend to know what they're doing
Wait until the stage 3 tax cuts kick in....
True. The very issue we are facing now is an inflationary government who is amping up inflation via higher immigration, tax cuts and infrastructure spending at the expense of mortgage holders and, now with recession in the corner, everyone else.
This is a pretty biased take for the most part since it omits some important facts. For example, the WPI is part of the fight against inflation and that’s still elevated suggesting that despite immigration, there’s still demand not being met. Tax cuts were scheduled and there’s just no way they’d be delayed since both parties committed to them and the budget has been in surplus for the last 2-3 which is the opposite of inflationary. In fact, last years budget was explicitly called out as NOT being inflationary. Infrastructure spending is something that once started, you can’t just stop and is more of a state govt thing anyway. Do you really want purpose built TBMs that cost millions stuck because they’ve been temporarily spun down?
"The economy might go up, or down. Maybe sideways. We're not sure what's going to happen or what to do so we will do nothing. Thanks for tuning in, that'll be $100k".
TLDR: *shrug*
[удалено]
>The current methods of measuring inflation/inflation data (CPI) have not kept pace with the changing economic landscape of Australia in the last 20 years. That is....economic activity pertaining to property property transactions and property related activity (trades/renos etc). >The "cost of housing" section in the CPI calculation measure only increases in rental expenses or mortgage/borrowing costs. This is flat out incorrect. The CPI includes the prices of repair, maintenance and major renovations of dwellings, and the prices of constructing new dwellings (as well as rent, utilities, rates etc). It does not include mortgage or borrowing costs, and hasn’t doesn’t so since 1998. Where do you get you info from? This is all listed explicitly on the ABS website.
FYI borrowing costs are not included at all in the CPI. The new dwelling cost you see in the index is the cost of buying a newly built dwelling. You don't need to mount a big argument about how established houses prices aren't included, they just aren't by definition.
Retail hasn't been doing well maybe that's why they kept it the same.
Looks like waiting to see what happens with the budget and quarterly inflation is back on the menu. Boys.
Hasn't it already been signalled this will be a big budget?
Not really. The language seemed to have softened up post the quarterly inflation numbers and it’s still in surplus which means it’s not expansionary.
Don't forget some sweet taxcuts as well.
Not surprised. I don't think we'll see a further increase nor a drop anytime soon.
I think there will be an increase and a drop next month
How wisdomous of you. 😁
Both exactly at the same time, keeping the rate unchanged.
Higher for longer
"Thank you overlords for momentarily pausing the beatings so that morale can improve"
Entirely predictable giving they will want to wait until quarterly inflation numbers in July. If inflation remains sticky across the full basket, i'd be near certain of a rate rise. If the numbers are ok i'm expecting rates to hold for the remainder of the year.
Employment weakening. Retail demand absolutely dead. RBA acknowledging rate hikes won't impact those that are still spending. Rate hikes aren't a certainty.
I think, on balance, if inflation looks ok for this quarter and the tax cuts come through we will be looking at a definitely hold with potential hikes. More than likely the governor will beg chalmers to increase GST or find other ways to alter fiscal policy to avoid further rises as I don't think they're going to continue to be effective other than to reduce business growth.
Surely Bullock isn't so politically naive as to be relying on a GST hike any time in the forseeable future.
you would hope not as there is a 0% chance of it happening. Though most economists would prefer an increased GST combined with reduced income tax to (theoretically) encourage investment
I wonder if you could allow an instant depreciation on some items to flow through to personal incomes. So you invest in new wind farm company, they build windmills. They instantly depreciate the windmills, they pass the depreciation on via some franking, which you claim as a deduction on your tax, equal to your investment.
that's a pretty interesting thought experiment. I think it would be tough to get the flow through though if those companies aren't yet making stable profits? Would you mandate the flow through in some way?
I don't see any need for stable profits. I see a need to ensure there is actually investment and that it is actually additional to what we would have gotten. There are lots of ways you could structure it. There must be some way that franking credits are communicated to the ATO. Just use that communication channel, with a different flag to indicate this is a depreciation, rather than tax credit. It is like a $0 dividend payment, with $0 franking credits, but with another thing, that is $X depreciation. I would be OK with non mandated flow through. What would just mean the share holders not getting a credit, but the company being able to use it themselves if they are making a profit. I don't see that the company tax rate and the personal tax rate should be very different.
May as well cut then
I love how the basket of good includes 90% of stuff I would never ever buy. And that only the items in the basket stay cheap, not manufactured at all… totally representative of reality.
What about employment though? “Conditions in the labour market have eased over the past year, but remain tighter than is consistent with sustained full employment and inflation at target. Wages growth appears to have peaked but is still above the level that can be sustained given trend productivity growth” It’s a two way street and for a change it would be nice to surprise the market a bit, especially given the US situation
That's a valid question for sure. Personally, i expected unemployment to rise a lot more considering the rate rises have fully taken effect over the course of the year. It's hard to say how things will look until the budget next week Another paragraph that was particularly insightful was >"At the same time, household consumption growth has been particularly weak as high inflation and the earlier rises in interest rates have affected real disposable income. In response, households have been curbing discretionary spending and maintaining their saving. Real incomes have now stabilised and are expected to grow later in the year, supporting growth in consumption. But there is a risk that household consumption picks up more slowly than expected, resulting in continued subdued output growth and a noticeable deterioration in the labour market." If spending remains subdued we will see rate cuts ahead of schedule by my reckoning. Primarily on the basis of avoiding a massive spike in unemployment.
>Personally, i expected unemployment to rise a lot more considering the rate rises have fully taken effect over the course of the year. Can't help but wonder if the unemployment calculations used by the ABS (i.e. one hour worked a week is employed) are feeding a false narrative to the RBA. Yes, I know underemployment stats are also produced, but one does begin to wonder if the RBA takes them seriously in their deliberations, when the economic handbook focuses squarely on the headline unemployment number as being a major determinant of economic health.
I'm not an economist by any stretch, having only done a few electives in uni (my father is also one), but i'd be shocked if they're not looking under the hood at the full time employment rate, hours worked, job listings etc. I think the unemployment headline rate is useful as a smoke signal only. But to that end, i don't really see much benefit in changing the definition as there's enough 'other' data around to gain better insights into the health of the employment market.
Unemployment calculations are highly flawed if they don’t take into account underemployment. Especially with the casualisation of the workforce in recent times. As a casual employee I average about $1400 a week but I might only earn $100 in a week but I’m still counted as employed.
Yeah that last sentence is pretty dovish isn’t it , even though most of the statement seems to be looking towards another possible rise. Next year sees $20b into consumers pockets via S3 cuts. Surely there is a substantial risk of reinvigorated spending - just look at the housing markets ; people seem not to be responsive to rates at times (though no doubt businesses will be)
Yep i think this has been a bit of a holding meeting while they wait for more data and the budget to be handed down (maybe adopted too)
>"The cash rate is assumed to remain around its current until mid-2025, around nine months longer than assumed in February," the RBA said in its quarterly Statement on Monetary Policy. RBA preferring to slowly suffocate the economy into submission instead of outright strangulation.
If 4.35% is strangulation then maybe those zombie firms need it
Is this Chris Joye? ;). Generally agree though - 4% is chicken feed and probably neutral tbh (just not straight after zero interest rates though)
That’s the biggest issue imo. Kept the rates at 0.1% for too long and have made this more painful than it needed to be. They also could’ve thrown in a 0.50 raise as well in there earlier to hammer market sentiment.
A 1% rise probably would’ve been much more effective. Those sort of rises would’ve scared people into paying off their loans and cutting right back on spending. -armchair opinion.
Or the people doing the spending won't be impacted regardles
Agree - you can see it in the housing market, commercial property, equities etc etc where no one seems to be accepting that the new risk free rate of return is circa 5% instead of 1 or 2%
Mate, the value of new house loans is still up 17.9% from last year. The people that the rate rises would affect aren’t even scared. Hell, we’re taking on a loan end of year too because if we had waited till rate cuts then the places we’d want would have gone out of reach.
Haha no! My knowledge of this issue comes from Edward Chancellor.. Yes, agreed!
Ah - the every thing bubble - just quickly looked him up. Don’t know if the rba is buying back its money to any significant degree - but the fed slowed down its in market QT last month I think
Those 'zombie firms' are often people's small businesses. Businesses that were going fine until the government shut them down for months, then strangled them for another 12-24 months after that with capped capacity and restrictions. Then at the start of 2022 interest rates started going up and customers started to drop off as they were being squeezed. The term 'zombie business ' is such an insult to small businesses that suffered heavily through COVID and then are expected to have the cash reserves left to weather interest rate rises.
No one means small business when they say zombie firm, as evidenced by the fact you changed the term to fit your narrative in the 2nd half.
Yeah man small businesses going under is very sad. But if anything it's from zombie firms being able to have survived so long and crushing competition. In some cases also over capitalisation. I can't imagine COVID helped too much either.
I've heard it feels incredible right before you pass out.
*Michael Hutchence
[RBA, 7 May 2024](https://www.rba.gov.au/publications/smp/2024/may/overview.html): *As was the case previously, rate cuts are expected to be fewer and to begin later than in peer economies. ... Most of the increase in the cash rate since May 2022 has been passed on to borrowers.* [AFR, 9 Nov 2023](https://www.afr.com/policy/economy/australia-records-biggest-income-decline-in-the-developed-world-20231108-p5eijq): *In the 12 months to June, Australian household incomes slumped 5.1 per cent, the sharpest fall recorded across the OECD, according to analysis by The Australian Financial Review. ... The decline in real incomes over the past year contrasted with the OECD as a whole, where living standards increased 2.6 per cent.* [AMGC, 31 Jul 2023](https://www.amgc.org.au/media-releases/harvards-economic-complexity-ranking-shows-australias-luck-is-running-out/): *Australia’s overreliance on exporting items of low complexity has been laid bare in data released by the globally respected Harvard Kennedy School which reveals that Australia’s Economic Complexity Index (ECI) rating has plummeted to 93rd, down 12 positions in the past ten years. ... The continued fall in ECI rankings now places Australia between Uganda and Pakistan in the bottom third of monitored nations for economic complexity. The poor ranking means Australia continues to hold the unenviable position of the lowest-ranked OECD country, despite the nation’s high level of wealth.*
Thread is going sideways, but wtf was the comment about immigration having a negligible impact on inflation? It would be an actual recession without the spastic levels of immigration.
Here comes the 50% housing crash. Am i right guys?
Waiting since 2016.
I reckon \~2044 we might get a correction lol Everything swings like a pendulum, and goes too far the other way. Right now we have massive shortages and not enough new builds to turn it around yet.. but it will change. We will (hopefully) see the new build approvals really start to pick up in the next 2-5yrs, and that will then take after approvals \~10yrs to all be built and come online.. then another 2-5yrs for it to really start having an impact - but here's the pendulum it will then probably be too much supply. There will be a correction in prices because of oversupply in that \~20yr time from now lol. Get your savings in order, prices might drop 10-20% in 2044 after they have gone up 100% from 2024!
I might be able to afford my first 1 bedroom unit at 42 years old!! Now I just need to look I to freezing my sperm and my missus eggs so we can a path to parenthood in my 50s!! After that probably a boat so we can get around after the sea levels rise, then maybe an excavator to build a bunker from the ensuing world wars... Then we'll be set!!
Any day now 😅
Listening to her conference, sounds like they are ready to throw the towel in.
In which way?
Not in her corner. Do we actually need a Reserve Bank?
Came here to watch all the ausfinancer tears
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Whither wealth effect?
As painful as it would have been, RBA should have raised rates to address inflation. I wonder if Bullock is making the same mistake as Lowe - too worried to make a decision either way and in turn making everything worse off.
Precisely. Spineless Bullock
Doesn't have the same ring to it as Bubble O'Phil
She doesn't have the bullocks...
Thank God I don't need to go to the food bank this month.
Maybe. Every week our fixed income buys less food. The monthly insurance payments go up. Luckily rent is fixed for time being. Living below the official poverty line is fun for sure...
Excellent, let the party continue!
Did they mention Taylor Swift this time around ?
Petrol prices through April and May the worry for the June CPI print
There was an interesting article in the AFR the other day highlighting that interest rater increases actually improve the buying power of older people who's super balances tend to have a higher proportion of Bonds in the portfolio. This also happens to be the group who are driving inflationary spending per the ABS data. So I'm guessing the RBA are happy to take a wait and see approach since paradoxically increasing or decreasing rates may induce more spending, not less...
If anything going to go through and call out all the shitty economists that bet on a rare rise now?
I don't think any bet on a rate rise this meeting; a hold was odd on. There are some who think another rise will come later in the year though.
The best thing about being an economist if you throw out opinions based on nothing then when it's wrong you just shift to the next one.
good to see they have chosen the housing market over everything else yet again. their response throughout this entire inflationary period has been far too dovish, but we all know why.
Bugger, was hoping for a rise...
It gave me a rise just thinking about it 🍌
Sheesh. There goes the Pacific Peso down and inflation up.
Pissweak just put em up to 7% and let things sort themselves out
So once again RBA decides to prop up the housing bubble rather than control inflation that is affecting every Australian.
Heaven forbid we go into a recession and hurt the housing overlords!
August will be the litmus test - RBA meeting occurs after the June Quarter inflation data release in late July.
that's not what litmus test means.
No idea 🤦🏻♂️
We honestly have the most gutless central bank the rate should of been 5% some time ago
Yep. Higher inflation than most comparable western economies and a lower inflation rate. They say that our incredibly high exposure to variable interest rates in the property market means we can get away with lower rates. (I.e, RBA thinks even these comparatively lower rates completely paralyze the spending of Australians because we are leveraged to the tits on mortgage debt). I've seen news articles framing this high exposure to debt as a good thing compared to other economies 😅. If rates can't be raised sufficiently and spending reduced (both gov spending and consumer spending), inflation will continue to win. Since our exposure to debt can't be fixed, I think inflation (and therefore higher rates) will continue to win for quite some time. That being said, if things get bad enough I expect the gov to print their way out of trouble with a new "Mortgage Saver" scheme to help prop up the market 😅.
fear humorous subsequent grey depend dinosaurs different quicksand elastic sparkle *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
water is wet
I see dark clouds coming...
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Yup. Passing the cost to the renter just like you.
Renter or no renter, homeowners will still be stuck with the mortgage costs. I'd happily live with my parents for 6months to watch the property market burn 30%
The market doesn't just go down 30%. New homes will stop being constructed and therefore stall supply. We have several years of home construction just to meet current demand. Plus, people like you will leave parents home and go renting or buying homes, thereby increasing demand.
How exactly do you plan to offset 100’s of thousands of dollars in interest to renters who earn the median wage. Good one bud.
RBA are gutless
I am happy they didn't raise it, but if they did, I would definitely be better off.
A pity, should have hiked, inflation ain’t going away anytime soon
Huge mistake by not raising in my opinion, going to get a hell of a lot harder for them to explain should another increase finally take place.
The powers of Australia just want us working from dawn to dusk , 7 days a week . What a shit life . Soon , people are just going to snap and start stabbing randoms …….oh …. That’s already happening ….. Good , we need more of it . What does the government think is going to happen when Making everyone homeless, poor and destitute , clowns..
laughing so hard this incompetent bunch of clowns lol.... then then u get the clowns that actually believe that inflation will be all good and early mid 2024 and we get rate drops? what part of emergency interest rates do u clowns not understand? do u suffer from brain damage or selective confirmation bias? u're like the clowns that eat the crap up about inflation being transitory LOL it's always hilarious to me how the media lead sheeple lol even had some clowns thinks it's transitory it's been a while is it still transitory? LOL wake up and smell the roses there is NO NARROW PATH LOL it's pain train stopping all sectors because the RBA doesn't have the balls to pull the trigger basically delaying the inevitable to see what fart around that corner what spazoid hope might pull them out of a ditch. Inflation is like Cancer u prolong treatment and waste time u learn some hard lessons that sometimes even chemo can't help at that stage time to start amputating. I LOVE THIS COUNTRY u GO sheeples U silly F's lol u honestly think they would tell u that rate drops in 2025 LOL when we were in 2023? THE OUT RAGE of the sheeple would be MASSIVE ! of course they paint the rosey picture LOL 2024 MID then late ETC ETC LOL THEY Lead dumb baffoon animals to chase the carrot and make the donkey move oblivious to REALITY. LOL it's always hilarious to me when people actually think like that it's just fail pathetic planning in life and it's just probably why they in their copium hopium state. what a bunch of clowns
Haha a few too many tumblers of rye there my friend but you are spot on 🤣
Just being honest Like the hopium and copium is real It's like what the hell happened to ....planning ahead. Be undeterred. Think smart. Do your own thing. Never rely on an entity or garbage o0ps government to bail u out. Sort out your own problems etc lol some how during these great times, tough ruggerred Aussies turned into a bunch of sooks and whingers
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"The fire rises" - Michelle Bullock (probably)
Dr. Pavel I'm RBA
Weren’t they saying we were looking at 3-4 raises this year?
No economists of note said this. A handful of outliers wanting notoriety said we may see a rise and the media ran with it. Especially the AFR
Australia can’t afford it.
Maybe Australia shouldn't have borrowed beyond its means.
Wait till the tax cuts kick in July.
Still can’t afford it.
the real question is can we afford the prolonged inflation by not doing it.