Quinkana

Australian Interest Rates Will Rise After Election, Bernie Fraser Says

18% would do me just fine thanks.

bondipom

What do you think of Latham's low rate promise? Sounds like something that will be in the news when rates do go up.

MikeStanton

Given that the Reserve Bank sets the rate and is 'independent' how will Latham achieve that? By cutting back on government spending or fiddling with taxes?

bondipom

He said he would not remove the independance of the RBA. He knows what that would do to the AUD which would then need a higher IR typical of non independant central banks.

His claim was that he would maintain a balanced budget and keep the tax burden low as a proportion of GDP. All easily forgotten when in power.

Quinkana

He said his Mum would give him a hiding if interest rates went up so he must be pretty determined.

Both parties have "committed" to low rates - and both believe in motherhood to, presumably.

Presuming continued independance of the Reserve Bank of Australia (which largely targets inflation - to ensure after tax interest rates on "risk free" money are near zero to slightly positive) and given the high amount of debt in Aus and the USA - both parties must believe that economic conditions will deteriorate putting a lid on inflation.

The interest rate yield curve is flat as a tack - the market is non-commital to bearish on yields in the future. The possibility exists of a sudden upward change in interest rates if lenders to the USA (and Aus) just stop lending recycled $ let alone start selling $ or $ debt.

I say right now - with unemployment at 5% - is as good as it gets economically. Keep your job and your money safe even if yeild is low - "keep your powder dry".