The July 5th announcement by the RBA to leave rates on hold for the 7th consecutive month came as no surprise to me. Inflation figures have proved what I have been saying all the time, "that we are not in as good a shape as the RBAthinks we are". But thats not all bad, we have been saving..so the money is still there.
I have been talking to people over recent months and saying that if we do receive another rate rise then that should be it for a long while and then it may even be followed by a fall in rates. Whilst it should be noted by anyone reading this that it is an opinion only and not to be construed as advice I still feel fairly certain that we may have seen a peak, or near-peak in rates for some time.
This is good news for all consumers as the figures reviewed by the RBA stated that consumer confidence and spending is actually down on prediction. This can be easily seen by speaking to retailers locally and business people who may be doing it tough.
I see no real need for people to worry about rates running away, or going into a panic to fix for assurance. Although fixed rates are a personal strategy they should be carefully weighed up along with lifestyle and financial goals. They certainly have their place for many people.
I do see an erosion in equity happening in the market place. Property values have receded quite a bit in the last year or so and I am still amazed that people are often surprised when they find out that their property is worth less than it was 12 months ago. Broad reality locally is that with people leaving town, the building industry in a slump, retail down and people trying to hoard savings more that there is less money on offer in the market. If that is the case then there are not sufficient funds to push prices up (supply and demand) and prices will fall so vendors can meet the market to satisfy their goals. The question is are prices going to come off some more after August 01 when stamp duty rates increase considerably?
The solution: SPEND MORE MONEY!
Sounds Utopian, I suppose.
If everyone changed their spending habits in simple terms the world will change. Playing coy only serves to smother local businesses trying to grow. If there is no cash in the system then supply dries up, people close their doors and people lose jobs. Whilst I agree it is important to save it is also important to support local business where you can and as much as you can. If you don't have the money to spend... then recommend local businesses to your friends and family who do (see the Business Network Directory tab in this blog). We need to encourage positivity and promote our locals, or there will be no change.
Has the RBA made a blunder in rasing rates so much last year? Only history will tell. Their latest decision to hold them hopefully then is a precursor to a much better attitude to gauging the economy.