Janet CollinsConfused About the Australian Economy?
August 5th 2008 07:27
When it comes to the economy, for months now we have heard the government and the economists tell us a story one day and a conflicting one the next. So if you are confused about the economy, you are not the only one.- and you certainly have every right to be.
First it was the Reserve Bank. An interest rate rise was essential they said to curb spending and halt inflation. Then the banks of course had to pass this one on to their customers. More than that, the banks felt more responsibility for the economy to stop there so they increased interest rates again and again just so they could do their bit for Australia.
Of course the escalating petrol prices curbed our spending on other items also and contributed to the rise in food prices. We all stopped buying – especially on the items that we didn’t feel essential. Now it is reported that because we have stopped spending businesses are now feeling the pain and have stopped hiring. The retailers are also admitting that now the prices of their goods will probably rise to recover what they have lost in decreased sales.
Today the Reserve Bank announced that although the interest rates will probably go down in coming months, they won’t be reduced immediately. That will of course only be the Reserve Bank interest rates and even if they do come down, it won’t necessarily mean that the banks will follow. Some leading economists are now saying that it will be all too late to avoid a recession.
If you can make sense of all this you are far more tuned in than I am. After all, the reason for the rise in interest rates in the first place was to stop inflation and to ward off a recession. Now we are being told that the high interest rates have been the cause of escalating debt which has pushed us towards this impending recession.
If you can get your head around all of this, my hat goes off to you!
First it was the Reserve Bank. An interest rate rise was essential they said to curb spending and halt inflation. Then the banks of course had to pass this one on to their customers. More than that, the banks felt more responsibility for the economy to stop there so they increased interest rates again and again just so they could do their bit for Australia.
Of course the escalating petrol prices curbed our spending on other items also and contributed to the rise in food prices. We all stopped buying – especially on the items that we didn’t feel essential. Now it is reported that because we have stopped spending businesses are now feeling the pain and have stopped hiring. The retailers are also admitting that now the prices of their goods will probably rise to recover what they have lost in decreased sales.
Today the Reserve Bank announced that although the interest rates will probably go down in coming months, they won’t be reduced immediately. That will of course only be the Reserve Bank interest rates and even if they do come down, it won’t necessarily mean that the banks will follow. Some leading economists are now saying that it will be all too late to avoid a recession.
If you can make sense of all this you are far more tuned in than I am. After all, the reason for the rise in interest rates in the first place was to stop inflation and to ward off a recession. Now we are being told that the high interest rates have been the cause of escalating debt which has pushed us towards this impending recession.
If you can get your head around all of this, my hat goes off to you!
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Comment by TimmyH
Tech News
Can you HACK it?
Genyration
Comment by colocountry
i'm late with this response but it is fuelled by the statement by the head of the Comm Bank today who threatened that his org was not subject to governance when it comes tp interest rates and our Australian Reserve bank. MMmmm! He would be as popular as SBW at the Bulldogs AGM!! When you profit from "usury" you are twice damned...or so the medieval adage suggests. To hell with all those who profit from the misfortunes of others!!!... hang on.. how many shares do we ha... Sorry folks.. It is all for the greater good we are privileged to have such outstanding institutions watching over our hard-earned money!!
Col