Rising Household Debt May Weigh on Medium-Term Chinese Growth

Chinese household debt has continued to rise rapidly, reaching 85% of disposable income at end-2018, Fitch Ratings says in a report published today. Rising debt servicing costs do not pose near-term risks to financial stability, but will weigh on economic growth in the medium term and this is reflected in our latest GDP forecasts. Chinese … Continue reading “Rising Household Debt May Weigh on Medium-Term Chinese Growth”

Are The Global Economic Dominos Starting To Fall?

While the global economy is a while away from a recession the dominos are beginning to fall and may eventually all topple over according to JPMorgan. From Investor Daily. Global market strategist at JPMorgan Kerry Craig said that his market case was not for a recession but there were elements to look out for.  “The dominos … Continue reading “Are The Global Economic Dominos Starting To Fall?”

RBA Minutes A Bit Contradictory

The minutes out today spelled out the slowing momentum in the economy, and the cuts in rates would help with spare capacity, but would not lift risks emanating from higher debt in the medium term. Cannot see how both can be true, when the focus appears to be on rekindling the housing market! And given … Continue reading “RBA Minutes A Bit Contradictory”

RBA’s Explanation For The Cut

Courtesy of Philip Lowe, speaking in Darwin tonight. Savers do not even warrant a mention… more the shame! As I am sure you are aware, this morning the Board decided to reduce the cash rate by a quarter of a percentage point to 1 per cent. This follows a similar adjustment last month. This easing of monetary … Continue reading “RBA’s Explanation For The Cut”

RBA Rate Decision – Cut Again

The RBA has released their statement today. At its meeting today, the Board decided to lower the cash rate by 25 basis points to 1.00 per cent. This follows a similar reduction at the Board’s June meeting. This easing of monetary policy will support employment growth and provide greater confidence that inflation will be consistent with the medium-term … Continue reading “RBA Rate Decision – Cut Again”

Household Wealth Up (and Down)

The ABS released their latest Household Finance and Wealth Statistics to March 2019. Household wealth per capita decreased for a third consecutive quarter to $404,556.4, falling $1,511.9. This follows a record $9,992.7 fall in household wealth per capita in the previous quarter, and reflects the continued holding losses on residential land and dwellings. The falls … Continue reading “Household Wealth Up (and Down)”

RBA Penny Drops On Underemployment (Just A Decade Late)

RBA Governor Philip Lowe spoke at CEDA today. He signals more rate cuts, their potential limited impact and the need for other strategies to move towards higher levels of employment. Underemployment makes an entrance – finally! We have been talking about this for years. Today, I would like to explain why this is so and … Continue reading “RBA Penny Drops On Underemployment (Just A Decade Late)”

RBA Minutes – 4.5% Unemployment Target Means More Rate Cuts Ahead [Never Mind Savers!]

The RBA released their minutes today which clearly signals further rate cuts ahead as they drive toward to goal of 4.5% unemployment – the latest magic figure when wages will start to rise. Savers be dammed, to try and get household spending up. International Economic Conditions Members commenced their discussion by noting that the data … Continue reading “RBA Minutes – 4.5% Unemployment Target Means More Rate Cuts Ahead [Never Mind Savers!]”

March GDP Result Weak Again

Australia’s gross domestic product (GDP) grew by 0.4% in the March quarter 2019, following a 0.2% rise in the December quarter. The Australian economy grew 1.8% through the year, according to the ABS. This is well below the 2.75% trend average. The expenditure measure of GDP grew by only 0.2%, below expectations. Trend GDP per … Continue reading “March GDP Result Weak Again”

The RBA On The Cash Rate Cut

Governor Lowe explains. In summary: Expect more cuts. Banks should pass on the cuts. Borrowers will benefit more than savers in the interests of the economy. The exchange rate will fall. Spare capacity in the economy needs to be utilised. At its core, today’s decision was taken to support employment growth and to provide greater … Continue reading “The RBA On The Cash Rate Cut”