Together we fight it
August 3rd 2006 08:02
A day after the interest rate was officially raised to 6%, the market bounched back with vengence with performance not much seen throughout the run up period to the expected rates hike. The ASX S&P 200 benchmark index rose to 1.3% at closing while the All Ords rose 1.2%. All thanks to the US markets, banking stocks and some positive earnings annoucements for the day. As I mentioned before in this blog that the rates hike would push the market down creating bargaining opportunites to load in banking stocks which would eventually benefit from the rates rise. Fellow blogger, Jon commented that the hike could improve banks' return from loans, over the short to medium term, and the increased rate is not likely to be passed to account holders. We all heard the noise from the hike about how ordinary people like us will suffer but at the end of the day, the banks are the winners.
Another round of interest hike is possible in December with a number of economists predicting it inevitable. Rationally, the recent hike was a necessary step to quell runaway inflation given the strenght of the local economy, above averageworld economic growth conditions and, of course, high oil price. Instead of cryin over spilled milk, it is about time that everyone should do thier part in preventing another round of rate rise, which is to tighten our belts. This is exactly what the RBA wants us to do. If everyone reduce thier spending further, prices eventually will come down and therefore lower aggegrate consumer spending level, thus sending signals to the RBA not to increase the rate.
Decemeber is the season, certainly we do not want another round of hike during that time. We can't control the world situation but we can do it at home and all of us should fight this together for a jolly Christmas.
For those of you who are too depressed about the hike, now its a good time to get out of the country as the Aussie dollar exchange rate has increased. Goto some island where you could spend reasonably low for a better living.
Another round of interest hike is possible in December with a number of economists predicting it inevitable. Rationally, the recent hike was a necessary step to quell runaway inflation given the strenght of the local economy, above averageworld economic growth conditions and, of course, high oil price. Instead of cryin over spilled milk, it is about time that everyone should do thier part in preventing another round of rate rise, which is to tighten our belts. This is exactly what the RBA wants us to do. If everyone reduce thier spending further, prices eventually will come down and therefore lower aggegrate consumer spending level, thus sending signals to the RBA not to increase the rate.
Decemeber is the season, certainly we do not want another round of hike during that time. We can't control the world situation but we can do it at home and all of us should fight this together for a jolly Christmas.
For those of you who are too depressed about the hike, now its a good time to get out of the country as the Aussie dollar exchange rate has increased. Goto some island where you could spend reasonably low for a better living.
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