• *Over the year to April, the monthly CPI indicator rose by 3.6 per cent in headline terms, and by 4.1 per cent excluding volatile items and holiday travel, which was similar to its pace in December 2023.*
• *The central forecasts published in May were for inflation to return to the target range of 2–3 per cent in the second half of 2025 and to the midpoint in 2026.*
• *Since then, there have been indications that momentum in economic activity is weak, including slow growth in GDP, a rise in the unemployment rate and slower-than-expected wages growth.*
• *The persistence of services price inflation is a key uncertainty.*
• *There has also been an increase in wealth, driven by housing prices.*
• *But there is a risk that household consumption picks up more slowly than expected, resulting in continued subdued output growth and a noticeable deterioration in the labour market.*
*Conditions in the labour market eased further over the past month but remain tighter than is consistent with sustained full employment and inflation at target.*
>The persistence of services price inflation is a key uncertainty
Is this not the cemet blocks around the country's feet atm (and for the last year++)? I get why no one wants to talk about it (eg no one wants to hurt the cash cow), but still...
Don't fight the FED. Deploy the old jawbone to try to make people believe you might.
Actually by cutting the ECB may take some infkation pressure off over the rest of this year.
the Fed now has the government lobbying it (literally writing letters) asking it to cut - the treasury is screwed if they need to keep financing their multi trillion deficits at 5% 😉
"While recent data have been mixed, they have reinforced the need to remain vigilant to upside risks to inflation" RBA.
Without the NDIS underpinning employment growth in healthcare, and other inflationary relief measures under the government (e.g. tax cut we'd probably be talking about the RBA cutting rates today. At the end of the day, Australia is stuck between a rock & a hard place and there's certainly no relief in immediate sight.
I think they lost a really long decade over there. I was reading a book today (unrelated to finance) that mentioned NTT (a Japanese telecom company) having a market cap higher than the top 3 US companies combined. I was like wtf is this book from the 90's, checked the publication date and it was 1992. Times have changed. Also, the jpy exchange rate is on par with rates from the 80s.
Genuine ignorant question.
How much of this is driven by corporate profiteering and if it's substantial why isn't that a simpler way to tackle it?
Would policies like Monopoly regulation etc affect inflation in a positive way?
Less substantial than what has been made out in some sections of the media. Housing is the big issue - largest weighting in the CPI bucket and was still tracking at close to 5% in annual terms at the Q1 print. Strong migration coupled with supply constraints is, at the very least, partly to blame.
You aren't wrong. Our inflation position is not being helped thanks to toothless fiscal policy. The RBA's mandate is monetary policy only, so they can only do so much to influence inflation.
Facebook users are up in arms. Some wanting the promised rate decreases.
General public are no better informed on interest rate changes than under previous boss of RBA.
Maybe house buyers will now appreciate that interest rates are not falling any time soon and reduce offers when buying property
That mindset will take time to filter through. We’ve basically had a generation of people who have only known falling rates and accelerating house prices.
For many people the best financial decisions they can make is buying a house. The ability to at least save some of your own money as equity is so important if you're looking for a long term way to get ahead.
It reasonable for the buyer, it still is a sound decision.
A 20+ year mortgage should consider more than just <5 years in advance.
Previous government ramming through FHB and super for housing is quite literally squeezing the last drop. I'm getting ads for <2% deposit loans on Reddit right now. If you can borrow a million dollars with barely 20k saved, then the value of a house is almost entirely independent of your financial situation, and entirely dependant on how much debt you're allowed to take on.
The more you borrow the more at risk you are if interest rate movements. With a large sum borrowed on margin, even the tiniest interest rate change can wipe you out. So those taking their first steps into the market are disproportionately exposed to higher risk compared to someone with only 30% remaining. Not to mention the risk of house prices falling and trapping you in a no equity situation.
Housing is, ultimately, a high margin gamble. I can't borrow money for the stock market without maintaining a maximum 50% LVR, but for some reason housing is allowed up to 98%?
That seems like a reckless financial decision with a 100% full send pray it lands on black or you're sleeping in the gutter mentality to me
This is the problem with these kind of forecasts, a forecast that's been wrong for years may eventually be proven correct but if you's stayed out for that long you're unlikely to have made any money staying out.
We need to just remind these people to keep posting. They were so loud a few years ago and now they don't post anymore. Why won't they post anymore? I need them to come back out.
Fat chance, so many cashed up people waiting to move to Australia atm.
If Government sees a house price fall, they will grant citizens ship to who ever buys a house for over 1m.
They don't even need to bring in cashed up immigrants because even poor immigrants have to live somewhere, even if it's ten to an apartment. The government only cares about making sure investors don't sell for a loss.
Chatting with a pest control guy when I had my place sprayed, 6 to 8 to an appointment is normal for 2 bedroom. 10 to 12 if it's a 3 bedroom appointment. He says the Cumberland council area in NSW is the worst as the council turns a blind eye to it. But the other are catching up. He wasn't complaining as it giving him business.
Lol I was just joking, but just remember. We need to bring it up from time to time to remind the doomsayers that it could seriously just happen any minute now.
Realistically it's mainly just government policy regarding taxation and approvals. See Melbourne for an example when property incentives are reduced as an investment
None of that changes the fact that the demand for housing still outweighs the supply and demand is growing faster than supply. Nothing the Victorian government has done has made housing more affordable by any significant amount.
Supply is impacted by approvals and approval timelines? Have a look at the approval days in NSW compared to overseas. It's like a few months vs 7 days
This in addition to approvals for high density
The government needs to cut spending as they are contributing to the prolonged inflation e.g. NDIS, tax cuts, First homeowner grants, utilities handouts, high migration, terrible housing investment incentives etc etc. Sometimes it feels like this country is run by bumbling amateurs not serious people.
Australia is a lucky country run mainly by second rate people who share its luck. It lives on other people's ideas, and, although its ordinary people are adaptable, most of its leaders (in all fields) so lack curiosity about the events that surround them that they are often taken by surprise.
How do you compete with a business that doesn't have to pay the same wages you pay, that doesn't have to adhere to the same safety or environmental standards, that doesn't require the same amount of permits and approvals and isn't subject to the same quality standards you are?
Lots of the solutions to decreasing inflation are incredibly unpopular.
The best way to reduce inflation would actually be a way to tax people without a mortgage (i.e. mostly pensioners). Guess whats incredibly unpopular? Taxing pensioners.
Its not always the government, its the average voter, and this country gets the politicians it deserves
Economists hate this one simple trick!
Just because subsidies manipulate the calculation used to track inflation doesn't mean the actual effect won't happen. Eventually it's gonna flow through to the figures.
It is giving people more money when high rates are trying to reduce the amount of money they have. In contributes to defeating the purpose of high rates
please read what I said.
the average migrant produces more than the average local, that means the balance of supply and demand tips towards supply from immigration.
Wrong. The biggest driver of inflation is house prices and the average migrant is not building an entire house as soon as they enter the country. We had 100,000 migrants enter the country in a single month this year and we had nowhere near that many houses built.
> the average migrant produces more than the average local.
Even if that were true it doesn't change the fact that migration is the cause of the housing crisis and the housing crisis is causing the inflation and cost of living crisis
You’re the one repeating a slogan without any evidence.
In general, Migration reduces wages, increases production capacity and increases the cost of housing. Now guess which one the RBA keeps pointing to as a problem? Inflation is stuck because of the rental crisis. Migration increases aggregate demand so that makes the pollies look good and business lobby is happy but it pushes up rents and this is a major factor in current services inflation
New migrants tend to spend money as they need to buy goods and spend on services to set themselves up. This increases demand which can have an inflationary effect. High levels of migration also certainly contribute to the worse housing affordability and availability crisis this country has every had. Our population has increased about 40% in 20 years, do you think this could have an effect on housing in anyway?
If the Australia Club can just keep my HISA rate high while the housing market crashes then I can jump in and buy some cheap houses.
Beats the hell out of investing in the pathetic capital losses of the ASX.
> Broader data indicate continuing excess demand in the economy, coupled with elevated domestic cost pressures, for both labour and non-labour inputs. Conditions in the labour market eased further over the past month but remain tighter than is consistent with sustained full employment and inflation at target. Wages growth appears to have peaked but is still above the level that can be sustained given trend productivity growth.
If you're a wage earner it's the stated goal of the RBA to take money out of your pocket.
>If you're a wage earner it's the stated goal of the RBA to take money out of your pocket.
RBA along with the rest of the political and economic system
does seem like that a bit - would their view change if productivity growth improved? it seems to imply it productivity growth is better then we would see and it would justify wages growth. how are we even trying to improve productivity growth?
Well the RBAs mandate isn’t as simple as giving home buyers as easy access to credit as humanly possible. I know it’s not talked about too much but RBA cash rate effects so much more than home loans.
Cry about what exactly? Rates being roughly in-line with long term averages? I think a hike would be good for the economy and Australians as a whole but I'm quite set personally.
yeah and average house price/mortgage size has far exceeded wage growth. comparing with long term averages isn't exactly the right approach in this case.
The part about me crying is what had me confused. Not sure why house prices increasing would make me sad. Despite that I wouldn’t mind a hike even though I’m well aware that has a negative effect on property prices growing.
Edit: They blocked me or deleted a comment that replied to this saying I missed the point and that long term averages don't apply to our current situation, so I'm putting what I had typed out as my reply here:
You might believe that the long term average doesn't apply but it's not a given. I’ve heard the sentiment before but I haven’t personally seen a good case for it being made, on the flip side we’re all currently witnessing how bargain basement rates can completely turn things on their head in really negative ways.
How is reverting to some arbitrary long term average of rates even relevant in trying to control inflation? Makes no sense IMO and is just the crutch of people who want rates higher because they think they will be able to cash in on some housing collapse which isn't coming.
Yeah sometimes Reddit is weird on phone, on my end it was just an error message saying to try again later, which is similar/the same as when you try to reply to someone who blocked you or to a deleted comment.
I didn’t say they were. Stage 3 tax cuts aren’t about wage rises but they will be inflationary in the sense they put more money in people’s pockets, particularly at a time when the savings rate is so low
Feds & States created inflation and drive it currently.
How does increasing interest rates help?
Busting the middle class doesn’t work.
Our ageing population with cash earning interest & properties worth plenty are spending like never before!
Time for lateral thinking & considered change before we pop! Not far to go……
Tough position for the RBA. Even though they have very little to do with inflation and cost of living, a drop in the rates will signal strongly the Government is all-in on maintaining the status quo. The lives of everyone who have not benefitted from the assets growth rise (those under 45) will be so so bad that the Government may achieve a majority population (18-45 age group) on medication. This will make the current and future voting blocks easy to manage.
Didn't make it onto the housing ladder? Then enjoy paying the inflation tax while we inflate away the big debts people have taken on. They win and you don't.
We have been in a recession for a while, whether we have to wait for migration to drop far enough for it to show in the official figures doesn’t change that.
Doubt. Someone earning $45,001 – $135,000 pays 32% tax & Medicare.
If they earn 5% on HISA, they pay 1.6% in tax = after tax return of 3.4%.
The latest inflation reading was 3.6%.
Therefore going backwards by 0.2%.
Anyone earning more than this bracket is going backward faster. Anyone earning less than this bracket is only marginally ahead, and are probably much worse off overall due to significant cost of living increases over recent years.
These HISA people are living in their own world if they think this is 'free money'.
Except many of us are earning 5.5%. 32% tax is 3.74% which is above 3.6%.
And for some of us, we have fixed rate loans at 1.99% still, so it *is* free money.
If you’re 1.99% mortgage is more then your savings, then you’re earning 3.51%. Factor in that your mortgage isn’t tax deductible, that becomes 1.75% after tax. You’d be losing 1.85% after tax and inflation. This becomes even worse if your mortgage is more then your savings which is the case for most people with a mortgage.
As for those who are saving, anyone paying more then 32% tax or have more then $100k in savings (only 2 banks offer 5.5% rates, and it’s limited to balances under $100k) will be behind after tax and inflation.
What? What is this bullshit logic you've cooked up? If you'd be paying off your mortgage instead, you're up. Simple as that.
The question is whether or not you'd be better off with the money in shares than your mortgage, but if the intent is to put it back as you're coming off your loan, then the risk is great and you're effectively getting 6% going forward.
I’m saying you’d be better off with the same savings and no debt, even if the debt is fixed at a low rate.
Edit:
And regardless of the options you’ve provided, you’re probably down after tax inflation anyway.
Woah inflation! Tax! Buzzwords! I enjoy all this **free** **money** while the interest rates are high. Only those with a mortage are upset over anyone with a HISA
The next meeting will include 4 weeks of the new tax cuts, probably too soon for any increased spending to be seen. So I think it's likely that they increase rates in mid September.
They are too scared to increase it cause of backlash over households doing it tough. Will be very interesting in August now pollies got their wage increase and other wage rises occurring. They will have to decide do I put the rate up as it should be done or leave it at 4.35 and keep my job.
Had your finger hovering over that post button!
OP is omnipresent on reddit.
Wonder if they had two versions ready
I just want milk that tastes like real milk.
Without all the fat
Yes, but I'd actually like the rate to be either 4.25 or 4.5%. This 4.35% is messing with my OCD
Next meeting RBA lowers rate to 4.34%
And kaos ensues . I do just wish the RBA would rip the band-aid off and just go to 4.75%
*Without all the fiat.
Vibez don't support a hike. You have to ride the feels like a true economist.
It must be the only job where you can be wrong all the time and stay employed.
Don’t forget the meteorologists!
Haha there you go..
100% chance of weather tomorrow. I got you.
Wait. I can be wrong all the time. What do these guys even do?
They can be wrong *with data*
• *Over the year to April, the monthly CPI indicator rose by 3.6 per cent in headline terms, and by 4.1 per cent excluding volatile items and holiday travel, which was similar to its pace in December 2023.* • *The central forecasts published in May were for inflation to return to the target range of 2–3 per cent in the second half of 2025 and to the midpoint in 2026.* • *Since then, there have been indications that momentum in economic activity is weak, including slow growth in GDP, a rise in the unemployment rate and slower-than-expected wages growth.* • *The persistence of services price inflation is a key uncertainty.* • *There has also been an increase in wealth, driven by housing prices.* • *But there is a risk that household consumption picks up more slowly than expected, resulting in continued subdued output growth and a noticeable deterioration in the labour market.*
Rise in unemployment? I thought unemployment came down to 4.0%
Last meeting was 7 May and at the time seasonally adjusted unemployment was at 3.8%
*Conditions in the labour market eased further over the past month but remain tighter than is consistent with sustained full employment and inflation at target.*
>The persistence of services price inflation is a key uncertainty Is this not the cemet blocks around the country's feet atm (and for the last year++)? I get why no one wants to talk about it (eg no one wants to hurt the cash cow), but still...
> There has also been an increase in wealth, driven by housing prices. There has also been an increase in poverty, driven by housing prices.
Rates aren't moving anywhere until our big daddy starts cutting rates.
..oh yes daddy...
Don't fight the FED. Deploy the old jawbone to try to make people believe you might. Actually by cutting the ECB may take some infkation pressure off over the rest of this year.
the Fed now has the government lobbying it (literally writing letters) asking it to cut - the treasury is screwed if they need to keep financing their multi trillion deficits at 5% 😉
"While recent data have been mixed, they have reinforced the need to remain vigilant to upside risks to inflation" RBA. Without the NDIS underpinning employment growth in healthcare, and other inflationary relief measures under the government (e.g. tax cut we'd probably be talking about the RBA cutting rates today. At the end of the day, Australia is stuck between a rock & a hard place and there's certainly no relief in immediate sight.
Are we half-way through the lost decade yet?
aus has not gotten a lost decade the way japan has. We are nowhere near.
I think they lost a really long decade over there. I was reading a book today (unrelated to finance) that mentioned NTT (a Japanese telecom company) having a market cap higher than the top 3 US companies combined. I was like wtf is this book from the 90's, checked the publication date and it was 1992. Times have changed. Also, the jpy exchange rate is on par with rates from the 80s.
A very interesting doco on the same topic: https://youtu.be/lmnVP35uZFY?si=kkny2Xw4wLwgaYQ-
just you wait man. it's coming for us soon enough.
yes but that is the bare minimum
Guys! I bet early 2026 will have a first cut! 🥴
I can guarantee you that you 100% have a chance of being correct.
just in time for the elections, u mean?
I thank the RBA for preventing hyperinflation.
stage 3 tax cuts soon
think of that inflation!
But not as they were legislated!
As somebody who stood to gain more under the original stage 3 - good.
Genuine ignorant question. How much of this is driven by corporate profiteering and if it's substantial why isn't that a simpler way to tackle it? Would policies like Monopoly regulation etc affect inflation in a positive way?
Less substantial than what has been made out in some sections of the media. Housing is the big issue - largest weighting in the CPI bucket and was still tracking at close to 5% in annual terms at the Q1 print. Strong migration coupled with supply constraints is, at the very least, partly to blame.
You aren't wrong. Our inflation position is not being helped thanks to toothless fiscal policy. The RBA's mandate is monetary policy only, so they can only do so much to influence inflation.
Facebook users are up in arms. Some wanting the promised rate decreases. General public are no better informed on interest rate changes than under previous boss of RBA. Maybe house buyers will now appreciate that interest rates are not falling any time soon and reduce offers when buying property
That mindset will take time to filter through. We’ve basically had a generation of people who have only known falling rates and accelerating house prices.
they will DIE before the housing price falls. they wont allow it.
Sadly, it’s properly true that the government has sold out future generations from the property market.
House buyers operate on FOMO, not foresight.
For many people the best financial decisions they can make is buying a house. The ability to at least save some of your own money as equity is so important if you're looking for a long term way to get ahead. It reasonable for the buyer, it still is a sound decision.
A 20+ year mortgage should consider more than just <5 years in advance. Previous government ramming through FHB and super for housing is quite literally squeezing the last drop. I'm getting ads for <2% deposit loans on Reddit right now. If you can borrow a million dollars with barely 20k saved, then the value of a house is almost entirely independent of your financial situation, and entirely dependant on how much debt you're allowed to take on. The more you borrow the more at risk you are if interest rate movements. With a large sum borrowed on margin, even the tiniest interest rate change can wipe you out. So those taking their first steps into the market are disproportionately exposed to higher risk compared to someone with only 30% remaining. Not to mention the risk of house prices falling and trapping you in a no equity situation. Housing is, ultimately, a high margin gamble. I can't borrow money for the stock market without maintaining a maximum 50% LVR, but for some reason housing is allowed up to 98%? That seems like a reckless financial decision with a 100% full send pray it lands on black or you're sleeping in the gutter mentality to me
Fear of Stuck Renting is what I had when I won my house last year, and it’s legit.
More cost of living relief credit and tax cuts for everyone. I'm sure those will help.
Hold gang with another w 😎
Rents are a lagging indicator and they keep going up. Rents will keep inflation higher for longer than expected unless the economy breaks first
50% housing crash here we come!
THE GREAT HOUSING CRASH OF 202~~2~~ ~~3~~ 4 APPROACHES
I think you mean. 201~~5~~ ~~6~~ ~~7~~ ~~8~~ ~~9~~ 202~~0~~ ~~1~~ ~~2~~ ~~3~~ 4
The crash was six weeks away when I bought in 2004.
Perth still only 5 years from their last bottom
Perth housing growth tracks the iron ore price, its very different from the rest of the Australian housing market. (Its also tiny in comparison)
Bingo Investors are going to have a rude awakening.
Especially the more recent ones who picked up "bargains" in Armadale.
Ah yes The crack addicts wet dream is also an investors wet dream.
so what does this mean going forward? i live in Perth and looking to buy
Drop an f in the chat for our boy WMR
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This is the problem with these kind of forecasts, a forecast that's been wrong for years may eventually be proven correct but if you's stayed out for that long you're unlikely to have made any money staying out.
also then you start thinking how many years you have aged throughout that time and get even more depressed
They are still waiting for the fixed mortgage cliff that was suppose to come in late 2022
People are still going over the cliff currently, most just underestimated how prepared they were for it
We need to just remind these people to keep posting. They were so loud a few years ago and now they don't post anymore. Why won't they post anymore? I need them to come back out.
4-5-6 years since last hike to hit bottom of market. I'll stick to my guns, and probably be wrong, but that's OK.
Fat chance, so many cashed up people waiting to move to Australia atm. If Government sees a house price fall, they will grant citizens ship to who ever buys a house for over 1m.
They don't even need to bring in cashed up immigrants because even poor immigrants have to live somewhere, even if it's ten to an apartment. The government only cares about making sure investors don't sell for a loss.
Chatting with a pest control guy when I had my place sprayed, 6 to 8 to an appointment is normal for 2 bedroom. 10 to 12 if it's a 3 bedroom appointment. He says the Cumberland council area in NSW is the worst as the council turns a blind eye to it. But the other are catching up. He wasn't complaining as it giving him business.
10 people in a 3 bedroom?? Wtf
Lol I was just joking, but just remember. We need to bring it up from time to time to remind the doomsayers that it could seriously just happen any minute now.
If Canada doesn't crash, I can't see australia crashing either.
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> Aus is only propped up by gov. Aus is propped up by our ridiculously high immigration rate which is set by government
Realistically it's mainly just government policy regarding taxation and approvals. See Melbourne for an example when property incentives are reduced as an investment
None of that changes the fact that the demand for housing still outweighs the supply and demand is growing faster than supply. Nothing the Victorian government has done has made housing more affordable by any significant amount.
Supply is impacted by approvals and approval timelines? Have a look at the approval days in NSW compared to overseas. It's like a few months vs 7 days This in addition to approvals for high density
Well the RBA think the global economy is in a trough, and unlikely to go down from here. Sounds incredibly like Phil's nah can't see it until 2024
What a shock. Despite what the pundits say… Jerome Powell is still our Daddy. Until the US move we won’t do anything.
This will hurt a lot of people. It's all about area under the curve. And it's a lot of area right now.
The government needs to cut spending as they are contributing to the prolonged inflation e.g. NDIS, tax cuts, First homeowner grants, utilities handouts, high migration, terrible housing investment incentives etc etc. Sometimes it feels like this country is run by bumbling amateurs not serious people.
Australia is a lucky country run mainly by second rate people who share its luck. It lives on other people's ideas, and, although its ordinary people are adaptable, most of its leaders (in all fields) so lack curiosity about the events that surround them that they are often taken by surprise.
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Do you ever get sick of being downvoted , because your comments suggest you don't
How do you compete with a business that doesn't have to pay the same wages you pay, that doesn't have to adhere to the same safety or environmental standards, that doesn't require the same amount of permits and approvals and isn't subject to the same quality standards you are?
Lots of the solutions to decreasing inflation are incredibly unpopular. The best way to reduce inflation would actually be a way to tax people without a mortgage (i.e. mostly pensioners). Guess whats incredibly unpopular? Taxing pensioners. Its not always the government, its the average voter, and this country gets the politicians it deserves
Make the PPOR in the asset test for the pension. No point the boomer living in a multi million dollar house collecting welfare.
Increase the superannuation guarantee.
None of that addresses the cost of food, or housing. Which are both private sector problem spaces.
Utilities subsidies reduce headline inflation did you actually read it?
Economists hate this one simple trick! Just because subsidies manipulate the calculation used to track inflation doesn't mean the actual effect won't happen. Eventually it's gonna flow through to the figures.
It is giving people more money when high rates are trying to reduce the amount of money they have. In contributes to defeating the purpose of high rates
nah. they need to tax anyone who earns money without working. ie landlords, asset owners, all types of investor etc.
Yes that as well
why is migration inflationary? the average migrant produces more than the average local.
Migration increases demand. Unless supply increases to match increase in demand, prices increase. Look at house prices and rents
please read what I said. the average migrant produces more than the average local, that means the balance of supply and demand tips towards supply from immigration.
Wrong. The biggest driver of inflation is house prices and the average migrant is not building an entire house as soon as they enter the country. We had 100,000 migrants enter the country in a single month this year and we had nowhere near that many houses built.
you're picking one area, I'm talking average across everything, so I'll say it again, the average migrant produces more than the average local.
Have you got any studies on this? Would be interesting to read
> the average migrant produces more than the average local. Even if that were true it doesn't change the fact that migration is the cause of the housing crisis and the housing crisis is causing the inflation and cost of living crisis
have you considered maybe it's more complicated than that?
You’re the one repeating a slogan without any evidence. In general, Migration reduces wages, increases production capacity and increases the cost of housing. Now guess which one the RBA keeps pointing to as a problem? Inflation is stuck because of the rental crisis. Migration increases aggregate demand so that makes the pollies look good and business lobby is happy but it pushes up rents and this is a major factor in current services inflation
New migrants tend to spend money as they need to buy goods and spend on services to set themselves up. This increases demand which can have an inflationary effect. High levels of migration also certainly contribute to the worse housing affordability and availability crisis this country has every had. Our population has increased about 40% in 20 years, do you think this could have an effect on housing in anyway?
you seem to think inflation is exclusively a property prices thing.
Do i? please tell me more what i think
> please tell me more what i think you apparently think I care about continuing a conversation with you.
The problem is Australia doesn't have any housing supply so every migrant that comes over contributes to inflation/cost of living in the short term.
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do you know what the word "average" means?
If the Australia Club can just keep my HISA rate high while the housing market crashes then I can jump in and buy some cheap houses. Beats the hell out of investing in the pathetic capital losses of the ASX.
And if my granny had wheels she’d be a bicycle.
& government is not meant to influence rate decisions... Especially with the skewed way that we measure CPI - I wonder what true inflation is...
> Broader data indicate continuing excess demand in the economy, coupled with elevated domestic cost pressures, for both labour and non-labour inputs. Conditions in the labour market eased further over the past month but remain tighter than is consistent with sustained full employment and inflation at target. Wages growth appears to have peaked but is still above the level that can be sustained given trend productivity growth. If you're a wage earner it's the stated goal of the RBA to take money out of your pocket.
>If you're a wage earner it's the stated goal of the RBA to take money out of your pocket. RBA along with the rest of the political and economic system
does seem like that a bit - would their view change if productivity growth improved? it seems to imply it productivity growth is better then we would see and it would justify wages growth. how are we even trying to improve productivity growth?
more like Lib/Lab RBA can only do so much, government has to, you know? *govern.*
higher for longer is here to stay....
TIL 4.35% is 'higher'.
Home loan repayments as a percentage of household income is definitely “higher”
Well the RBAs mandate isn’t as simple as giving home buyers as easy access to credit as humanly possible. I know it’s not talked about too much but RBA cash rate effects so much more than home loans.
cry more brother
Cry about what exactly? Rates being roughly in-line with long term averages? I think a hike would be good for the economy and Australians as a whole but I'm quite set personally.
yeah and average house price/mortgage size has far exceeded wage growth. comparing with long term averages isn't exactly the right approach in this case.
The part about me crying is what had me confused. Not sure why house prices increasing would make me sad. Despite that I wouldn’t mind a hike even though I’m well aware that has a negative effect on property prices growing. Edit: They blocked me or deleted a comment that replied to this saying I missed the point and that long term averages don't apply to our current situation, so I'm putting what I had typed out as my reply here: You might believe that the long term average doesn't apply but it's not a given. I’ve heard the sentiment before but I haven’t personally seen a good case for it being made, on the flip side we’re all currently witnessing how bargain basement rates can completely turn things on their head in really negative ways.
How is reverting to some arbitrary long term average of rates even relevant in trying to control inflation? Makes no sense IMO and is just the crutch of people who want rates higher because they think they will be able to cash in on some housing collapse which isn't coming.
i've not deleted anything, you are literally replying to that comment still in your edit.
Yeah sometimes Reddit is weird on phone, on my end it was just an error message saying to try again later, which is similar/the same as when you try to reply to someone who blocked you or to a deleted comment.
Not the only one thinking hike would be good 👍
Stage 3 tax cuts are equivalent to x2 25 bps cash rate cuts
It should be obvious that wages are not the cause of inflation by now.
I didn’t say they were. Stage 3 tax cuts aren’t about wage rises but they will be inflationary in the sense they put more money in people’s pockets, particularly at a time when the savings rate is so low
Sweet might buy myself a coffee tomorrow
Don't tell them ahead of time or they'll raise coffee prices tomorrow to take profit.
Well coffees are up to 7 now at some places.
Big spender
Feds & States created inflation and drive it currently. How does increasing interest rates help? Busting the middle class doesn’t work. Our ageing population with cash earning interest & properties worth plenty are spending like never before! Time for lateral thinking & considered change before we pop! Not far to go……
So... Can I go back to buying smashed avo?
Tough position for the RBA. Even though they have very little to do with inflation and cost of living, a drop in the rates will signal strongly the Government is all-in on maintaining the status quo. The lives of everyone who have not benefitted from the assets growth rise (those under 45) will be so so bad that the Government may achieve a majority population (18-45 age group) on medication. This will make the current and future voting blocks easy to manage.
Didn't make it onto the housing ladder? Then enjoy paying the inflation tax while we inflate away the big debts people have taken on. They win and you don't.
They simply do whatever the Fed does in USA. Wonder if they have any idea what they are doing.
Won't come down till recession hits
We have been in a recession for a while, whether we have to wait for migration to drop far enough for it to show in the official figures doesn’t change that.
Keep it up is what I say I enjoy all this free money in my HISA!
After inflation and tax you might even break even!
Doubt. Someone earning $45,001 – $135,000 pays 32% tax & Medicare. If they earn 5% on HISA, they pay 1.6% in tax = after tax return of 3.4%. The latest inflation reading was 3.6%. Therefore going backwards by 0.2%. Anyone earning more than this bracket is going backward faster. Anyone earning less than this bracket is only marginally ahead, and are probably much worse off overall due to significant cost of living increases over recent years. These HISA people are living in their own world if they think this is 'free money'.
Now do mortgage offsets
Except many of us are earning 5.5%. 32% tax is 3.74% which is above 3.6%. And for some of us, we have fixed rate loans at 1.99% still, so it *is* free money.
If you’re 1.99% mortgage is more then your savings, then you’re earning 3.51%. Factor in that your mortgage isn’t tax deductible, that becomes 1.75% after tax. You’d be losing 1.85% after tax and inflation. This becomes even worse if your mortgage is more then your savings which is the case for most people with a mortgage. As for those who are saving, anyone paying more then 32% tax or have more then $100k in savings (only 2 banks offer 5.5% rates, and it’s limited to balances under $100k) will be behind after tax and inflation.
What? What is this bullshit logic you've cooked up? If you'd be paying off your mortgage instead, you're up. Simple as that. The question is whether or not you'd be better off with the money in shares than your mortgage, but if the intent is to put it back as you're coming off your loan, then the risk is great and you're effectively getting 6% going forward.
I’m saying you’d be better off with the same savings and no debt, even if the debt is fixed at a low rate. Edit: And regardless of the options you’ve provided, you’re probably down after tax inflation anyway.
Woah inflation! Tax! Buzzwords! I enjoy all this **free** **money** while the interest rates are high. Only those with a mortage are upset over anyone with a HISA
I don’t think those with a property and tax free offsets think about your HISAs at all.
I noticed term deposits are sub 5% now. Glad I locked in 2 years above 5
Fools. The best time to cut was 1 year ago. The second best time was today. Oh well, time will prove me right.
Need to up it.
I totally agree . The pop up campers and tents in the local park down the road arnt increasing quick enough .. We need more homeless and poor ,STAT….
Need to keep it where it is.
The next meeting will include 4 weeks of the new tax cuts, probably too soon for any increased spending to be seen. So I think it's likely that they increase rates in mid September.
Rates will have to rise, and spending will have to slow to tame inflation.
They are too scared to increase it cause of backlash over households doing it tough. Will be very interesting in August now pollies got their wage increase and other wage rises occurring. They will have to decide do I put the rate up as it should be done or leave it at 4.35 and keep my job.