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ABS 6401.0 - CPI Consumer Price Index, Australia, Mar 2012; Rate cut looms as Q1 inflation comes in at 0.1%, well below market expectation of 0.6%
Topic Started: 24 Apr 2012, 12:32 PM (3,884 Views)
earthsta
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Shadow
24 Apr 2012, 12:53 PM
The annual figure of 1.6% all happened in mid 2011. The last two quarters have been flat. With 0.1% last quarter, and zero inflation the previous quarter, the RBA has got to be annualising this and looking ahead to a possible full year of practically zero inflation unless they drop interest rates.

The only question now is whether rates drop 0.25% or 0.5% next week. I'm leaning to 0.5% on these figures.

This will be a huge boost for the property market, which has already been rising moderately since January...
You assume the banking industry will pass on any and all rate cuts in full. You are mistaken
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Shadow
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earthsta
24 Apr 2012, 03:13 PM
You assume the banking industry will pass on any and all rate cuts in full. You are mistaken
Incorrect. I expect the banks will pass on most, but not all, of the RBA cuts.

If the RBA cuts 50 points, I expect the banks will pass on approx. 40 points.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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stinkbug
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I reckon they'll drop 0.25% in May, then review the figures (in case their are revisions), and potentially another 0.25% a month or two after that.

They won't be keen to drop too far too fast.

I suspect the banks will pass on 0.15-0.20% of each 0.25% cut by the RBA.
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Enrico Palazzo
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I notice ex RBA "guru" Bloxham has suggested there may be NO CUT as inflation in non tradables i.e. everyday stuff, is still increasing

I also note other "esteemed" and big name economists and journos have totally missed this point (in commentary I've seen so far today anyway)


place your bets !
Edited by Enrico Palazzo, 24 Apr 2012, 04:05 PM.
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apex
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Shadow
24 Apr 2012, 03:37 PM
Incorrect. I expect the banks will pass on most, but not all, of the RBA cuts.

If the RBA cuts 50 points, I expect the banks will pass on approx. 40 points.
Bah! You're living in fantasy land. The last two rate cuts did nothing positive for the economy. The November cut was nearly six months ago and there was NO improvement in the property market. The next rate cuts won't do a damn thing either, no matter how much the RBA cuts rates, and even if the banks are stupid enough to pass it on, it won't do any good. Rates cuts didn't do any good in the USA, Japan or Ireland, did they? The force of disleveraging is so strong that even though the the RBA might try to keep slashing rates and pumping money into the economy, households will just keep on paying down their massive debts and remove that money from the economy faster than the RBA can add it. House prices are going nowhere but down, the party is over and specufestors like you are going to lose your shirts.
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stinkbug
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apex
24 Apr 2012, 04:42 PM
Bah! You're living in fantasy land. The last two rate cuts did nothing positive for the economy. The November cut was nearly six months ago and there was NO improvement in the property market. The next rate cuts won't do a damn thing either, no matter how much the RBA cuts rates, and even if the banks are stupid enough to pass it on, it won't do any good. Rates cuts didn't do any good in the USA, Japan or Ireland, did they? The force of disleveraging is so strong that even though the the RBA might try to keep slashing rates and pumping money into the economy, households will just keep on paying down their massive debts and remove that money from the economy faster than the RBA can add it. House prices are going nowhere but down, the party is over and specufestors like you are going to lose your shirts.
You realise the main aim of changing reserve rates has nothing to do with the property market, right?
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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zaph
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IR rate decreases normally place an upwards pressure on home prices. that may not result in prices going up, but simply not going down as much or stabilising.

ATM we have:

ppor only buyers - more debt averse than the past. paying down debt or saving. quite price sensitive - unlikely to bid up prices wildly.

1st or second IP buyers - see above. these are the vast majority of PIs. if their last purchase's has been in the last few years they are unlikely to have the equity to purchase another.

'professional' PI in accumulation phase - the rate decreases will help their serviceability but are likely to have high LVRs. price decreases probably mean they lack the equity to get the next place. hunting for a bargain and are very unlikely to bid up prices.

the above is based on medians and generalisations. there will be areas that under/outperform the median. for only $19.95 i can send you a report with my hot tips.

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muzza
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zaph
24 Apr 2012, 05:46 PM

for only $19.95 i can send you a report with my hot tips.

I'd heard you have hot tips Zaph.
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zaph
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apex
24 Apr 2012, 04:42 PM
Rates cuts didn't do any good in the USA, Japan or Ireland, did they?
at what point did those rate cuts occur, and from what base?

i might have it wrong but i thought they occurred once there were significant falls in prices and from a low IR base. we have not had significant price falls and the base rate to cut from is a lot higher.
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zaph
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Quote:
 
I'd heard you have hot tits Zaph.


corrected for you. i went to Thailand to get some dental work done but woke up with a nice set of c cup's. i hope you don't mind chest hair?
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