Rates on hold
The Reserve Bank makes an interest rate decision tomorrow, the last of the year, and like normal it will be on hold.
This means the officially cash rate has been on hold at the emergency low rate of 1.5 per cent for 15 months. So long ago that Glenn Stevens, who joined the Macquarie Bank Board was the governor at the time.
But I want you to remember the Reserve Bank’s charter – and that is the stability of the currency in Australia.
Lets look at that one over the past 18 months, pretty stable so that’s a tick for the Reserve Bank and its board.
B is the maintenance of full employment in Australia. Well, the past 18 months or so unemployment rates dropped from 5.7 to 5.4 per cent in the past 12 months.
346,000 jobs have been created. Sot hats a big tick for that as well.
There you can see, the economic prosperity of the Australian people. Now, be your own judge about this – is your welfare and prosperity better or worse off than two years ago. More jobs is good for prosperity, but with high house prices – Sydney and Melbourne of course – there are clear signs they are starting to cool.
Is this good or bad for prosperity?
Those household with high debt are vulnerable. They are sensitive to losing a job or higher interest rates. And as you are aware, there are calls for rates to be raised inline with parts of the world.
The question everyone needs to ask is whether high rates would hurt households than they would help.
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