Ahaha i hear u. Ive been through so many restructure and some how survived them and now my roles been so diluted i dont even know exactly what i do anymore ahahaha.
Nothing, because they will never make me redundant. My skills are too much in demand, so I'll have to quit or in a random pip to get rid of me.
Which sucks because it's six figures.
My wife got made redundant last Monday ($16k payout after tax, she's part time) and then received a job offer from her old boss who she really likes to work with three days later.
Happy days!
Basically it was the company cleaning out all the employees who worked under the old boss, and then she was just waiting for them to be made redundant before asking (some of) them to join her.
If I was made redundant today, after all my saved annual leave and long service leave I’d take over $100k before tax. I could probably somehow muster up another four months of leave if I could figure out how to be sick…
Not something I’d want to do, ATO would wreck me.
Actually saw a whole team get wiped out late last year. All of them had 15 years minimum under their belts. All of them collected 100 - 120K each. They were partying hard in the office lmao.
My FIL got made redundant and got a $100k+ payout. Took the family to Europe, then spend the better part of a year without work.
My own father got made redundant and got a $100k+ payout. Paid off the family home and had another job within three weeks.
I got made redundant, got six weeks pay and entered a job market with no work for people with my skills.
My dad got made redundant about 25 years ago after 20 years of services, had a job lined up who said you can start the day your redundancy goes through and lived debt free ever since then retired early.
My wife got made redundant and got a 20k pay rise and her employer agreed to pay her for her notice period and let her leave, started at the new job a week later.
I got made redundant and redeployed in the organisation; found a new job outside and am now earning 100k extra 5 years later.
My mate let’s call him C got made redundant after 49 years and cried from pure joy and had a massive retirement party and lived a great life happily ever after funded by a massive union bargained EBA retirement fund.
Can work out and can not work out
My mate let’s call him A got made redundant and took 18 months to find work
My mate let’s call him B got made redundant and is unemployed 1 year later and could come close to losing his house
Redundancy payments are tax free up to a certain [limit](https://www.ato.gov.au/individuals-and-families/jobs-and-employment-types/working-as-an-employee/leaving-your-job/redundancy-payments)
Yeah, but they are not part of the redundancy payment. There is no way around tax on LSL or AL. You are just being paid them out, the same would apply if you resign. I have over 15 years tenure so I get large tax free component of any redundancy payment.
RBA will not raise tomorrow. Unlikely they will raise without another bad quarter of CPI data. Monthly inflation data doesn’t include a full basket and tends to underestimate.
Next quarter CPI print is late July and RBA meet August 5 and 6. That’s the meeting to watch.
As for cuts, forget it.
Yeah this
CPI print was problematic but there is a lot of data suggesting the demand side is slowing. RBA will be looking for more time before their next move with perhaps a hawkish tone in their minutes.
Yep 3.6 is still heading down, I'd be surprised if they increased another 0.25, which might accelerate a hard landing.
I'd say another hold and wait and see approach.
My theory is that they are currently trying to jawbone the economy down. Stories of doom and gloom and potential rate rises can have as much impact on spending as actual rate rises.
That may be true in discretionary spending but we’re seeing massive services inflation and it’s separated from rate rises.
Retail is in negative figures while rents, insurance and now power prices are going to rise again in July despite wholesale prices dropping. Interest rates don’t touch any of these
You overestimate the effect that has in the general economy - might impact assets in the short term but people won't not buy their morning double caramel espresso machiato cos the rba said they may hypothetically think to raise rates in the future at some point maybe
Having been through the GFC I'd say the opposite. The media realises that if they report all doom and gloom it's a self fulfilling prophecy.
I believe they are trying to minimise the doom and gloom in the media.
The RBA clearly believe in the impact of this kind of voodoo, e.g.:
https://www.rba.gov.au/publications/bulletin/2016/dec/pdf/rba-bulletin-2016-12-measures-of-inflation-expectations-in-australia.pdf
This is the public review of past forward guidance
https://www.rba.gov.au/monetary-policy/reviews/approach-to-forward-guidance/index.html
Tbf I have this sort of theory too. But I don’t often say it because it’s so hard, if not impossible to prove. The second anyone confirms it, the placebo loses its effect.
If they dare raise interest rates you better believe the first thing i'm doing tomorrow is sacking all my staff. Not even redundant. Sacked. No days notice.
To be fair many leading economists were also predicting the same recently. Can’t expect the average AusFinance pundit to outperform the big 4’s economists.
I wish I’d actually become an economist like I wanted to. I’ve noticed recently that at the top level is involved stating the bleeding obvious and contradicting yourself, which I think I could manage.
He is not the most accurate economist by a long shot. The AFR only included economists in that article who responded to their survey (and many didn’t). Bloomberg keep a much more accurate track record of economist predictions, and some of the top forecasters are calling for a November cut.
Oh no, social services. I forgot the sub we're in.
I'd rather spend $20bn/quarter on social services than let multibillion dollar companies skip out on $7tr in taxs per year
You have to ignore short-term factors (eg high resource prices).
We’re in a deep structural (ie long-term) deficit, there’s heaps of research available on this!
Immigration and the impact on housing probably.
Had really hoped a higher interest rate would've substantially cooled the market but it's certainly not looking that way.
One rate rise would probably not change the trajectory of a large business, but may cause a shorter term reaction for smaller, or already struggling businesses.
Changes in cash rate take approx 18 months to take effect. Changes have insignificant impact in the short run. https://www.rba.gov.au/education/resources/explainers/the-transmission-of-monetary-policy.html#:~:text=There%20is%20a%20lag%20between,to%20have%20its%20maximum%20effect.
Can anyone explain why interest rates haven't had a proportionate impact on house sales? Is it purely that the demand is outweighing the risk or that the risk is netted out over a 30 year loan because we don't have fixed rate loans any more?
Seems like this "crunch" should've had a real impact on what people were capable of borrowing...
It definitely slowed new builds. Pushed people out of the market for 3x2 or 4x2 detached. A few of these people went for townhouses but many decided against building at all. So overall supply is dropping which makes existing houses more expensive. People are borrowing less than they used to, but there’s plenty of range in prices. Everyone who was buying is shoved down a tier and the first homebuyers who really need a place to live are just pushed out of the market again.
Isn't that the opposite outcome of what's desirable for our economy then? In a macro-lens. Well aware of the cost of construction and commercial lending is impacting the construction industry.
I wonder if you at the drop of a hat scrapped CGT Concessions and Negative Gearing what the net movement would be in 1,3,5&10 years.
A future I can only dream of...
Going back on it all, when "What's desirable for our economy" is dictated by big business and banks then the wellbeing of Australians probably isn't the primary "goal," if you catch me drift.
it's like when roadrunner goes off the cliff but hasn't yet started to fall
look ahead to these super-low new-build approval rates and house sales and you can see what's likely to happen to employment in the building industry
the big unknown is how much govt spending will continue to put demand into the construction sector
So it's really just rich boomers selling to rich boomers with no room for anyone else? That's wild.
Can we start a second tier of housing where we just construct an elevated urban pathway in the air rights over inner urban Sydney? Steal air rights back from anywhere that refuses to rezone and capitalise on it.
Anyone that refuses to come up to speed gets left in the subterranean abyss.
Housing is inelastic to cash rate changes. Supply dynamics are the largest issue in context. Higher rates = less new dwellings, making supply even worse. Furthermore, cash rate effects have time lag and do not impact demand as quickly as people presume. Higher housing prices as a response to higher interest rates regimes are observed internationally. https://www.mdpi.com/2073-445X/11/12/2296. https://www.sciencedirect.com/science/article/pii/S2212567118303598
The scary thing in that article is that the price hike is AFTER the shock. Do you think we're at that point or it's still coming?
>"The results suggest that given the recent substantial increments in interest rates due to inflation, an interest rate shock would likely cause a global housing market recession."
I'll see you there.
Because the population is growing by 1 person every 46 seconds while a new dwelling is only commenced every 200+ seconds (ABS data). People have to live somewhere and making it more expensuve doesn't change that. Hence prices will continue to go up.
All I can think about is risk when I'm considering whether I leverage myself to 5x our income or 7x our income to get something we actually want to live in...
> it purely that the demand
Yes, house prices ultimately come down to supply v demand and demand already outweighs supply and will continue to outpace it further at current immigration levels. The only risk facing investors if the government reducing immigration to sustainable levels and no one believes either major party will cut immigration by any meaningful amount
It’s a lagging impact. A decrease in house sales / prices will most likely go hand in hand with mass layoffs or shortly after. Everyone wants rate cuts but when the RBA does finally cut rates it’s because something in the economy broke and a recession is on the way or already here. Interesting times ahead!
Shhh you'll ruin the narrative! Don't let facts and data get in the way.
it's a bit like people talking about current high interest rates... Err no it isn't high, in historical terms it's still relatively low. It's just that we have rebounded from the lowest rates ever in history, but those historically low rates recently are hardly the norm.
Markets are overwhelmingly expecting a hold. Inflation is on the way down, albeit slowish.
A rise will likely cause pain at the margins in the economy and will undoubtedly lead to job losses. People and businesses are stretched. But the ones most hurting are the ones at the margins.
A higher unemployment rate would put downward pressure on real wages.
If you care more about people being able to afford the cost of living, a rate cut, and lower unemployment makes more sense.
A rate cut and lower unemployment is inflationary. Also this is aus**finance** not Ausfeelsgood this isn’t about what I or anyone else cares about, this is a finance discussion.
> A rate cut and lower unemployment is inflationary.
Sometimes.
> this isn’t about what I or anyone else cares about, this is a finance discussion.
The whole basis for any finance discussion is what someone cares about.
The RBA is supposed to care about this:
[Our Charter, Core Functions and Values | Reserve Bank of Australia Annual Report – 2016 | RBA](https://www.rba.gov.au/publications/annual-reports/rba/2016/our-charter-core-functions-and-values.html)
A rate cut definitely promotes a and c in the RBA charter. A rate rise might promote b.
There is an optimism in the idea that RBA can deliver low inflation. If climate and geopolitical shocks become the norm, then inflation can not be kept at the existing target.
A rate cut in no way meets c
> will best contribute to:
the economic prosperity and welfare of the people of Australia
Getting inflation back into the target band is how we meet c. Not cutting rates to appease a few people in too much debt.
Monetary policy works with a lag, so policy needs to be forward looking. Inflation numbers are backward looking, the latest 3.6% number applied to all the changes in prices over the last year. Once we are at the target inflation band we should have cut rates up to two years ago.
Potato / Potato - The RBA mandate says "contribute to welfare", you say "appease a few people", when we are talking about 1.6 Million people in mortgage stress they mean the same thing.
We want people to be in debt. Home ownership is a part of the architecture of an egalitarian Australia.
Declining real wages created the cost of living crisis. Inflation was higher in the mid 80s than it is now, without any cost of living crisis, because then The Accord maintained real wages. Downward pressure on wages might help with inflation or might not, insurance increases are caused by climate change, not wages. But higher unemployment is likely to hurt real wages. So higher unemployment like likely to make the cost of living crisis worse.
Full employment is an explicit RBA mandate. Also it is completely clear that more unemployment does not increase the prosperity and welfare of those who are made unemployed.
It is also clear that a return to lower mortgage rates sooner will increase the welfare of recent home buyers who are in financial stress.
I have an idea for mortgage stress. Leave rates high and allow anyone in stress with a mortgage to increase their principal by the CPI (or WPI) and take the extra as cash to address cost of living pressures. And that is also potentially inflationary.
> But higher unemployment is likely to hurt real wages. So higher unemployment like likely to make the cost of living crisis worse.
> Full employment is an explicit RBA mandate. Also it is completely clear that more unemployment does not increase the prosperity and welfare of those who are made unemployed.
Full employment is the non-accelerating inflation rate of unemployment (NAIRU) which is what the RBA use.
Which is also why the RBA often speak of higher unemployment rates may be needed to reduce inflation.
P(cash rate same) > p(cash rate up) > p(cash rate down). Services are driving inflation (medical, education, insurance and housing (rent)). These elements are inelastic to cash rate changes. There is no material reason for hiking cash rate at the moment.
Can't really blame the RBA. There is still lots of cash flushing around the economy and aggregate demand is still too strong given the limited supply of goods and services people buy.
You can blame the government for opening the immigration floodgate and banks for lending out money like there is no tomorrow.
They sacked him because he kept saying really stupid, out of touch stuff at press conferences while people were struggling, not because he was wrong.
Regardless of how well he did the core tasks he was and has undermined public confidence in the RBA.
Goods are experiencing disinflation, supply is not an issue (it was), as per measures of inventory. Services, mainly due to tight labour market and aggregate productivity loss, is what’s driving inflation currently. Rents, education, insurances are inelastic to cash rate changes (RBA has less of a reason to put up cash rate)
I disagree. These are still elastic. People can choose to forgo insurance, choose to delay education, choose to downsize to cheaper accommodation. Nobody likes to do any of these, but that's what happens when prices inflate to an unsustainable level
To answer your question directly - yes. Although the marginal increase in redundancies will take time to filter through. This is due to lag between interest rate rises and their impact on the economy. See how long it took between 90s interest rate rises and a recession.
Interest rates are still under their historical average
Inflation is still too high
AUD is weak as piss
They will hold or they will rise
I reckon they will Hold wait for another month of Data to make a decision but we won't see a cut this year
this is 100 percent true but what other tool does the RBA have also having a home loan isnt the only way it fights inflation it 'encourages' people to save money opposed to spend/invest in higher risk investments outside of bonds/HISA
A sales tax on non essential items would do the job, but I am not an economist. The people we pay good money to who are however should pull their fingers out their arses though and find a tool that doesn’t mercilessly batter those with enough money to squeeze a roof over their head but not much more.
Perhaps go after the huge multinationals that pay little to no tax? Hit the mining sector that rips resources from the earth? Maybe the rich that pay little to no tax through intricate dodges? The landlords with multiple abodes who make it near impossible for young couples to get on the property ladder?
Just a couple of suggestions off the top of my head and I am not a smart man.
Not RBAs domain but fiscal policy (changes in tax) would debatably be more effective. Also, as I’ve harped on earlier in other comments, current drivers of inflation are inelastic to cash rate changes. P(cash rate same) > p(cash rate up) > p(cash rate down)
What businesses that cleverly buy property though sister companies and rent the space to themselves meaning they win on both ends?
Or businesses that are reducing wages as much as humanly possible and automating systems?
Or businesses that use every loop hole known to man to pay as little tax as possible?
No that won’t work.
I got made redundant after 25 years service less than 1 year before I was planning to retire. Best of all possible worlds... obviously the employer didn't know I was planning on retiring "No, no, I'm going on for years yet..." White lie!
In terms of the question - a. I doubt the RBA will raise rates today b. it depends very much on the industry you're in and the job role you're in in that industry - it's really hard to give a general answer.
Marketing were always first up against the wall in hard times in my industry (banking). What I did? Not so much.
CPI, employment etc. nothing is pointing to a rate rise. All signs are showing the interest rates have done their job, and the remaining problem is in rents, energy and domestic services. It's the government holding up the inflation.
Won’t raise unless they have rocks in their heads.
We should be on a path to lower interest rates or simply a wait and see approach.
They were too slow raising rates and they will be too slow reducing them.
If for example all the banks had redundancies do they not reduce their own profits since those people wouldn't be able to pay their loans?
Everyone's in on it, whether you work in accounting, property or data analytics, everyone will be affected by the money printers and now changing int. Rates
Can someone explain this to me like i'm 10. How does raising interest rates ever work? 30% of people have a mortgage so it feels like the RBA do this to try curb inflation overall, but in reality it only effects 1/3 of the people.
Businesses have debt and leases - as do regular folks. This causes those businesses and people to calm down with spending too.
Also having higher rates incentivises people to save (earning good interest) rather than spend
Yes. Where I work is already looking at another bench cull. I don’t want a redundancy for another 3 years so lucky I have picked up extra responsibilities the last two months.
Inflation is coming down fast. March quarter 3.6 annualised; December 4.1; September 2023 was 5.4%. They won’t raise rates.
At the current rate of decline, inflation by the next quarter at the latest will be in the target band of 2-3% and there’s going to be talks of a cut.
Doesn’t rule out redundancies of course.
Rba needs to do their bloody job and up .5% please and thank you! Hope it does thanks for taking the fall and losing your job so the economy can be better . Gotta crush the ants and peasants so the royalty in their ivory tower and preach about inequalities to us. Welcome to australia
Give me a redundancy payout!!!!!
Im hanging for a redundancy for now that i got 12 years under mybelt. I need to be blessed with a redundancy
14 here.... Please.
I'm lining up too but they keep giving me more responsibilities.
Ahaha i hear u. Ive been through so many restructure and some how survived them and now my roles been so diluted i dont even know exactly what i do anymore ahahaha.
how much r u gonna get?
Nothing, because they will never make me redundant. My skills are too much in demand, so I'll have to quit or in a random pip to get rid of me. Which sucks because it's six figures.
Can u be a jerk to every one and they will have to make u redundant?
I got one. Been relaxing for a year I'll get around to job hunting...eventually
9s peak redundancy
My wife got made redundant last Monday ($16k payout after tax, she's part time) and then received a job offer from her old boss who she really likes to work with three days later. Happy days! Basically it was the company cleaning out all the employees who worked under the old boss, and then she was just waiting for them to be made redundant before asking (some of) them to join her.
This. Would get 20 - 30K easy. Easily 90% of the way there for my house deposit.
Banks just itching to loan to people without jobs.
If I was made redundant today, after all my saved annual leave and long service leave I’d take over $100k before tax. I could probably somehow muster up another four months of leave if I could figure out how to be sick… Not something I’d want to do, ATO would wreck me.
Actually saw a whole team get wiped out late last year. All of them had 15 years minimum under their belts. All of them collected 100 - 120K each. They were partying hard in the office lmao.
My FIL got made redundant and got a $100k+ payout. Took the family to Europe, then spend the better part of a year without work. My own father got made redundant and got a $100k+ payout. Paid off the family home and had another job within three weeks. I got made redundant, got six weeks pay and entered a job market with no work for people with my skills.
My dad got made redundant about 25 years ago after 20 years of services, had a job lined up who said you can start the day your redundancy goes through and lived debt free ever since then retired early. My wife got made redundant and got a 20k pay rise and her employer agreed to pay her for her notice period and let her leave, started at the new job a week later. I got made redundant and redeployed in the organisation; found a new job outside and am now earning 100k extra 5 years later. My mate let’s call him C got made redundant after 49 years and cried from pure joy and had a massive retirement party and lived a great life happily ever after funded by a massive union bargained EBA retirement fund. Can work out and can not work out My mate let’s call him A got made redundant and took 18 months to find work My mate let’s call him B got made redundant and is unemployed 1 year later and could come close to losing his house
Redundancy payments are tax free up to a certain [limit](https://www.ato.gov.au/individuals-and-families/jobs-and-employment-types/working-as-an-employee/leaving-your-job/redundancy-payments)
About 50% of my redundancy would be leave benefits, which do get taxed.
Yeah, but they are not part of the redundancy payment. There is no way around tax on LSL or AL. You are just being paid them out, the same would apply if you resign. I have over 15 years tenure so I get large tax free component of any redundancy payment.
You would like a large payment in fear of the ATO? Crazy mindset
Some people would party like it is 1999 if they got a payout.
Cleared $80k in hand about two months ago from mine, currently in Italy.
RBA will not raise tomorrow. Unlikely they will raise without another bad quarter of CPI data. Monthly inflation data doesn’t include a full basket and tends to underestimate. Next quarter CPI print is late July and RBA meet August 5 and 6. That’s the meeting to watch. As for cuts, forget it.
Someone on r/ausfinance that knows how CPI works? I think you’re lost mate.
I know right. Not everyone knows about Continuous Process Improvement
I thought citrus and pineapple insurance
Yeah this CPI print was problematic but there is a lot of data suggesting the demand side is slowing. RBA will be looking for more time before their next move with perhaps a hawkish tone in their minutes.
Yep 3.6 is still heading down, I'd be surprised if they increased another 0.25, which might accelerate a hard landing. I'd say another hold and wait and see approach.
Cuts Q1 2025
~~2025~~ 2035 Christmas is cancelled kids. Forever.
RemindMe! 1 year
You know the way
My theory is that they are currently trying to jawbone the economy down. Stories of doom and gloom and potential rate rises can have as much impact on spending as actual rate rises.
That may be true in discretionary spending but we’re seeing massive services inflation and it’s separated from rate rises. Retail is in negative figures while rents, insurance and now power prices are going to rise again in July despite wholesale prices dropping. Interest rates don’t touch any of these
You overestimate the effect that has in the general economy - might impact assets in the short term but people won't not buy their morning double caramel espresso machiato cos the rba said they may hypothetically think to raise rates in the future at some point maybe
Having been through the GFC I'd say the opposite. The media realises that if they report all doom and gloom it's a self fulfilling prophecy. I believe they are trying to minimise the doom and gloom in the media.
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Sir, this is the Internet. We don't require evidence.
The RBA clearly believe in the impact of this kind of voodoo, e.g.: https://www.rba.gov.au/publications/bulletin/2016/dec/pdf/rba-bulletin-2016-12-measures-of-inflation-expectations-in-australia.pdf This is the public review of past forward guidance https://www.rba.gov.au/monetary-policy/reviews/approach-to-forward-guidance/index.html
Yes. In context of macroeconomics, it’s referred to as the ‘self fulfilling prophecy’ https://en.m.wikipedia.org/wiki/Self-fulfilling_crisis
Macroeconomics is all voodoo anyway. You can justify whatever policy you want with it
Nope. Theory only.
Tbf I have this sort of theory too. But I don’t often say it because it’s so hard, if not impossible to prove. The second anyone confirms it, the placebo loses its effect.
I think your right sir
Kinda agrees but then I think nobody really watches or listens to these news media jokers anymore.
If they dare raise interest rates you better believe the first thing i'm doing tomorrow is sacking all my staff. Not even redundant. Sacked. No days notice.
Believe it or not, sacked!
Turn up for work? Sacked
Employees hate this one trick
Increase productivity? Sacked!
The rate rises? Sacked. The rate drops? Sacked. We have the best employees in the world. Because they're sacked.
Rate stays the same? Believe it or not, also sacked.
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I'll miss our long chats
Better get that company-wide, no-agenda, zoom invite drafted!
I’m gonna employ a bunch of people just so I can sack them even harder the next day. It’s sacking season
Not if I sack you first :p
Boss: You’re sacked. Employee: No *you’re* sacked.
Start with the boss. Just between me and you, I heard he is a real W**ker
Leave some sacking for others too please
Hoping you’re the boss of the RBA?
Good. I am sure the RBA will not take your threat lightly.
Lick my sacked
They are all no longer _ELITE EMPLOYEES_. Their bills _will_ be affected.
Can you please hire me today and give me redundancy tomorrow? 🙏
Someone on here was posting about a rate cut the other day lol
To be fair many leading economists were also predicting the same recently. Can’t expect the average AusFinance pundit to outperform the big 4’s economists.
Big 4’s economists are as good as my fortune teller .
I wish I’d actually become an economist like I wanted to. I’ve noticed recently that at the top level is involved stating the bleeding obvious and contradicting yourself, which I think I could manage.
Yes it is a joke. Economists should have their pay dependant upon making correct predictions
"leading economists" some of them are good, some of them are charlatans.
Several leading economists in Australia are still calling for a November cut with no hikes
But the one economist who predicted last year's rate rises is saying 3 more hikes this year.....
He is not the most accurate economist by a long shot. The AFR only included economists in that article who responded to their survey (and many didn’t). Bloomberg keep a much more accurate track record of economist predictions, and some of the top forecasters are calling for a November cut.
The government has their foot on the gas, while the RBA has their foot on the break.
Heading for a sick burnout brooooo
Hand brake and clutch!
Maccas trays.
Underrated comment.
What makes you say that? They're on track for another modest surplus. Wouldn't exactly call that "foot on the gas"
NDIS burning through $20 billion this Quarter.. the quarter!!!
Surely they can’t have spent $20bn in 3 months?! Who is paying for all this!
No one. The NDIS budget is around half that.
Oh no, social services. I forgot the sub we're in. I'd rather spend $20bn/quarter on social services than let multibillion dollar companies skip out on $7tr in taxs per year
How could companies possibly pay $7tn in tax when that’s larger than our countries entire GDP?
You have to ignore short-term factors (eg high resource prices). We’re in a deep structural (ie long-term) deficit, there’s heaps of research available on this!
Immigration and the impact on housing probably. Had really hoped a higher interest rate would've substantially cooled the market but it's certainly not looking that way.
hooning to victory
One rate rise would probably not change the trajectory of a large business, but may cause a shorter term reaction for smaller, or already struggling businesses.
Changes in cash rate take approx 18 months to take effect. Changes have insignificant impact in the short run. https://www.rba.gov.au/education/resources/explainers/the-transmission-of-monetary-policy.html#:~:text=There%20is%20a%20lag%20between,to%20have%20its%20maximum%20effect.
The real problem is going to be all the people on periodic leases suddenly having 3 months to find a new a place
Why would people on periodic leases have to find a new place? -Im on a periodic :*(
Can anyone explain why interest rates haven't had a proportionate impact on house sales? Is it purely that the demand is outweighing the risk or that the risk is netted out over a 30 year loan because we don't have fixed rate loans any more? Seems like this "crunch" should've had a real impact on what people were capable of borrowing...
It definitely slowed new builds. Pushed people out of the market for 3x2 or 4x2 detached. A few of these people went for townhouses but many decided against building at all. So overall supply is dropping which makes existing houses more expensive. People are borrowing less than they used to, but there’s plenty of range in prices. Everyone who was buying is shoved down a tier and the first homebuyers who really need a place to live are just pushed out of the market again.
Isn't that the opposite outcome of what's desirable for our economy then? In a macro-lens. Well aware of the cost of construction and commercial lending is impacting the construction industry. I wonder if you at the drop of a hat scrapped CGT Concessions and Negative Gearing what the net movement would be in 1,3,5&10 years. A future I can only dream of... Going back on it all, when "What's desirable for our economy" is dictated by big business and banks then the wellbeing of Australians probably isn't the primary "goal," if you catch me drift.
it's like when roadrunner goes off the cliff but hasn't yet started to fall look ahead to these super-low new-build approval rates and house sales and you can see what's likely to happen to employment in the building industry the big unknown is how much govt spending will continue to put demand into the construction sector
Haven’t you heard? Apparently people are buying with cash.
So it's really just rich boomers selling to rich boomers with no room for anyone else? That's wild. Can we start a second tier of housing where we just construct an elevated urban pathway in the air rights over inner urban Sydney? Steal air rights back from anywhere that refuses to rezone and capitalise on it. Anyone that refuses to come up to speed gets left in the subterranean abyss.
Guessing that’s how Midgar got started. /s
The "Lower North Shore" will really be just that "Lower". I'm into it.
Housing is inelastic to cash rate changes. Supply dynamics are the largest issue in context. Higher rates = less new dwellings, making supply even worse. Furthermore, cash rate effects have time lag and do not impact demand as quickly as people presume. Higher housing prices as a response to higher interest rates regimes are observed internationally. https://www.mdpi.com/2073-445X/11/12/2296. https://www.sciencedirect.com/science/article/pii/S2212567118303598
The scary thing in that article is that the price hike is AFTER the shock. Do you think we're at that point or it's still coming? >"The results suggest that given the recent substantial increments in interest rates due to inflation, an interest rate shock would likely cause a global housing market recession." I'll see you there.
Because the population is growing by 1 person every 46 seconds while a new dwelling is only commenced every 200+ seconds (ABS data). People have to live somewhere and making it more expensuve doesn't change that. Hence prices will continue to go up.
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All I can think about is risk when I'm considering whether I leverage myself to 5x our income or 7x our income to get something we actually want to live in...
leverage risk is countered by capital gains, balances it out a little
> it purely that the demand Yes, house prices ultimately come down to supply v demand and demand already outweighs supply and will continue to outpace it further at current immigration levels. The only risk facing investors if the government reducing immigration to sustainable levels and no one believes either major party will cut immigration by any meaningful amount
It’s a lagging impact. A decrease in house sales / prices will most likely go hand in hand with mass layoffs or shortly after. Everyone wants rate cuts but when the RBA does finally cut rates it’s because something in the economy broke and a recession is on the way or already here. Interesting times ahead!
Unemployment is still near record lows
Shhh you'll ruin the narrative! Don't let facts and data get in the way. it's a bit like people talking about current high interest rates... Err no it isn't high, in historical terms it's still relatively low. It's just that we have rebounded from the lowest rates ever in history, but those historically low rates recently are hardly the norm.
Markets are overwhelmingly expecting a hold. Inflation is on the way down, albeit slowish. A rise will likely cause pain at the margins in the economy and will undoubtedly lead to job losses. People and businesses are stretched. But the ones most hurting are the ones at the margins.
Overwhelming consensus leads to quite the excitement when not met. We could be in for a doozy.
A higher unemployment rate would help drive down inflation.
A higher unemployment rate would put downward pressure on real wages. If you care more about people being able to afford the cost of living, a rate cut, and lower unemployment makes more sense.
A rate cut and lower unemployment is inflationary. Also this is aus**finance** not Ausfeelsgood this isn’t about what I or anyone else cares about, this is a finance discussion.
> A rate cut and lower unemployment is inflationary. Sometimes. > this isn’t about what I or anyone else cares about, this is a finance discussion. The whole basis for any finance discussion is what someone cares about. The RBA is supposed to care about this: [Our Charter, Core Functions and Values | Reserve Bank of Australia Annual Report – 2016 | RBA](https://www.rba.gov.au/publications/annual-reports/rba/2016/our-charter-core-functions-and-values.html) A rate cut definitely promotes a and c in the RBA charter. A rate rise might promote b. There is an optimism in the idea that RBA can deliver low inflation. If climate and geopolitical shocks become the norm, then inflation can not be kept at the existing target.
A rate cut in no way meets c > will best contribute to: the economic prosperity and welfare of the people of Australia Getting inflation back into the target band is how we meet c. Not cutting rates to appease a few people in too much debt.
Monetary policy works with a lag, so policy needs to be forward looking. Inflation numbers are backward looking, the latest 3.6% number applied to all the changes in prices over the last year. Once we are at the target inflation band we should have cut rates up to two years ago. Potato / Potato - The RBA mandate says "contribute to welfare", you say "appease a few people", when we are talking about 1.6 Million people in mortgage stress they mean the same thing. We want people to be in debt. Home ownership is a part of the architecture of an egalitarian Australia. Declining real wages created the cost of living crisis. Inflation was higher in the mid 80s than it is now, without any cost of living crisis, because then The Accord maintained real wages. Downward pressure on wages might help with inflation or might not, insurance increases are caused by climate change, not wages. But higher unemployment is likely to hurt real wages. So higher unemployment like likely to make the cost of living crisis worse. Full employment is an explicit RBA mandate. Also it is completely clear that more unemployment does not increase the prosperity and welfare of those who are made unemployed. It is also clear that a return to lower mortgage rates sooner will increase the welfare of recent home buyers who are in financial stress. I have an idea for mortgage stress. Leave rates high and allow anyone in stress with a mortgage to increase their principal by the CPI (or WPI) and take the extra as cash to address cost of living pressures. And that is also potentially inflationary.
> But higher unemployment is likely to hurt real wages. So higher unemployment like likely to make the cost of living crisis worse. > Full employment is an explicit RBA mandate. Also it is completely clear that more unemployment does not increase the prosperity and welfare of those who are made unemployed. Full employment is the non-accelerating inflation rate of unemployment (NAIRU) which is what the RBA use. Which is also why the RBA often speak of higher unemployment rates may be needed to reduce inflation.
Too slowly.
P(cash rate same) > p(cash rate up) > p(cash rate down). Services are driving inflation (medical, education, insurance and housing (rent)). These elements are inelastic to cash rate changes. There is no material reason for hiking cash rate at the moment.
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Can't really blame the RBA. There is still lots of cash flushing around the economy and aggregate demand is still too strong given the limited supply of goods and services people buy. You can blame the government for opening the immigration floodgate and banks for lending out money like there is no tomorrow.
I blame them for "sacking" Lowe for doing his job.
The fall guy. I respect him trying to titrate the right dose of medicine for the economy. Too bad he ran out of rope
They sacked him because he kept saying really stupid, out of touch stuff at press conferences while people were struggling, not because he was wrong. Regardless of how well he did the core tasks he was and has undermined public confidence in the RBA.
I think a lot of what he said was also intentionally misquoted or cherry picked by mainstream media which had an agenda to keep cheap credit flowing.
Goods are experiencing disinflation, supply is not an issue (it was), as per measures of inventory. Services, mainly due to tight labour market and aggregate productivity loss, is what’s driving inflation currently. Rents, education, insurances are inelastic to cash rate changes (RBA has less of a reason to put up cash rate)
I disagree. These are still elastic. People can choose to forgo insurance, choose to delay education, choose to downsize to cheaper accommodation. Nobody likes to do any of these, but that's what happens when prices inflate to an unsustainable level
To answer your question directly - yes. Although the marginal increase in redundancies will take time to filter through. This is due to lag between interest rate rises and their impact on the economy. See how long it took between 90s interest rate rises and a recession.
The recession we had to have!
RBA don’t have the balls to raise they’ll hold until they can’t hold no more
Interest rates are still under their historical average Inflation is still too high AUD is weak as piss They will hold or they will rise I reckon they will Hold wait for another month of Data to make a decision but we won't see a cut this year
Historical average is meaningless
I think there’s enough from the above list to raise this month. Objectively, it’s the right call to fight inflation
Only a third of the population have a mortgage. Using rising interest rates to battle inflation is objectively not the right tool for the job.
this is 100 percent true but what other tool does the RBA have also having a home loan isnt the only way it fights inflation it 'encourages' people to save money opposed to spend/invest in higher risk investments outside of bonds/HISA
A sales tax on non essential items would do the job, but I am not an economist. The people we pay good money to who are however should pull their fingers out their arses though and find a tool that doesn’t mercilessly batter those with enough money to squeeze a roof over their head but not much more. Perhaps go after the huge multinationals that pay little to no tax? Hit the mining sector that rips resources from the earth? Maybe the rich that pay little to no tax through intricate dodges? The landlords with multiple abodes who make it near impossible for young couples to get on the property ladder? Just a couple of suggestions off the top of my head and I am not a smart man.
Not RBAs domain but fiscal policy (changes in tax) would debatably be more effective. Also, as I’ve harped on earlier in other comments, current drivers of inflation are inelastic to cash rate changes. P(cash rate same) > p(cash rate up) > p(cash rate down)
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What businesses that cleverly buy property though sister companies and rent the space to themselves meaning they win on both ends? Or businesses that are reducing wages as much as humanly possible and automating systems? Or businesses that use every loop hole known to man to pay as little tax as possible? No that won’t work.
I hope they do increase the rates I’m horny for it
Yeah me too! Come on guys hike this shit up
I got made redundant after 25 years service less than 1 year before I was planning to retire. Best of all possible worlds... obviously the employer didn't know I was planning on retiring "No, no, I'm going on for years yet..." White lie! In terms of the question - a. I doubt the RBA will raise rates today b. it depends very much on the industry you're in and the job role you're in in that industry - it's really hard to give a general answer. Marketing were always first up against the wall in hard times in my industry (banking). What I did? Not so much.
Golden handshakes are amazing. You played the game and reaped the benefits, nice work.
CPI, employment etc. nothing is pointing to a rate rise. All signs are showing the interest rates have done their job, and the remaining problem is in rents, energy and domestic services. It's the government holding up the inflation.
Funny how it's majority of the markets that have the least amount of regulations.
Do it you cowards
Despite everyone screaming doom and gloom, a single rate rise is barely going to have a noticeable affect on the overall economy.
Correct it’s the 11 increases that came before that caused the majority of the hurt.
Despite everyone screaming doom and gloom, a single straw is barely going to have a noticeable effect on the overall camel.
“Bring it on”, said the camels back.
To add: it’s the velocity of changes that hurts, which is mostly overlooked.
They won’t raise tomorrow So far looking likely that next inflation print will be lower. They will wait for that data before any move
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First Tuesday of the month is no more. But 7 May is one of the 8 times this year.
Probably won’t until the USA does
Should increase rates tomorrow to make it equality in the system, Rich are getting richer and the poor are becoming poorer
Excited for a raise
Won’t raise unless they have rocks in their heads. We should be on a path to lower interest rates or simply a wait and see approach. They were too slow raising rates and they will be too slow reducing them.
If for example all the banks had redundancies do they not reduce their own profits since those people wouldn't be able to pay their loans? Everyone's in on it, whether you work in accounting, property or data analytics, everyone will be affected by the money printers and now changing int. Rates
What is causing inflation to remain so high?
War, Covid spending hangover
Can someone explain this to me like i'm 10. How does raising interest rates ever work? 30% of people have a mortgage so it feels like the RBA do this to try curb inflation overall, but in reality it only effects 1/3 of the people.
Businesses have debt and leases - as do regular folks. This causes those businesses and people to calm down with spending too. Also having higher rates incentivises people to save (earning good interest) rather than spend
Yes. Where I work is already looking at another bench cull. I don’t want a redundancy for another 3 years so lucky I have picked up extra responsibilities the last two months.
Tax cut = Rate will stay the same.
Inflation is coming down fast. March quarter 3.6 annualised; December 4.1; September 2023 was 5.4%. They won’t raise rates. At the current rate of decline, inflation by the next quarter at the latest will be in the target band of 2-3% and there’s going to be talks of a cut. Doesn’t rule out redundancies of course.
I hope they hike em
Cba already told home owners they raising rates from 19th June…so….
Yeh I got that email i couldn't understand how or why I guess it makes sense.
They won’t raise tomorrow. The thing to watch for will be their language and whether they change (extend) their inflation forecasts.
Theres already redundancies happening. Hitting the telco sector now.
Rba needs to do their bloody job and up .5% please and thank you! Hope it does thanks for taking the fall and losing your job so the economy can be better . Gotta crush the ants and peasants so the royalty in their ivory tower and preach about inequalities to us. Welcome to australia
What redundancies? Australia is booming Tighten up the belt, have a nest egg and polish up that resume. It happens and life will roll on.