INTEREST RATE OUTLOOK
NO CHANGE TO OFFICIAL INTEREST RATES
The Board of the Reserve Bank of Australia has not changed official
interest rates at its monthly meeting. The official cash rate
remains at 5.25 percent for the 10th consecutive month. This outcome
was widely expected with many observers relating the outcome as
much to the federal election campaign as economic factors. Predictably,
both major political parties are now claiming it helps support
their cause.
FORECASTING A RISE
Leading financial think-tank, Westpac's economic unit, says there
should be no increase in interest rates until March at the earliest
but warns of a small lift at that time. The bank cites the good
overall current balance of the economy together with the effects
of the increase in oil prices as the main reasons.
FORECASTING A REDUCTION
The Murdoch press' leading business writer, Terry McCrann, insists
there will be no rate rise for the remainder of 2004. In fact
he's even forecasting reductions early next year. McCrann reckons
the continued high oil prices and their inevitable effects on
the economy will force the issue.
BUSINESS
NEWS
EXPECTATIONS
D&B's National Business Expectations Survey has revealed the
strongest expectations in seven months for continued business
sales and profits. But D&B is quick to point out however,
that even a small increase in interest rates will have an adverse
effect on the present situation. The company says over 60% of
its survey respondents cited rising oil prices as the biggest
concern.
WEALTH
BRW's latest Young & Rich research found success in retail
was the biggest earner for Australia's emerging business leaders.
That was followed by the Services, Technology, Entertainment,
Property, Telecoms and Media sectors. These are different to wealth
generators in BRW's established Rich 200 list where agriculture,
manufacturing, transport and utilities are common.
TRADING LIES
The Australian Readers Digest survey on Australian behaviour found
over 60% of people were dishonest in the workplace with regular
lies being the most common problem. The financial sector was not
singled out for special mention.
BUSINESS
OUTLOOK
OIL PRICE CONCERN
The major cause of the rising price of crude, Chinese demand,
continues to grow and with it the pressure on inflation. The giant
economy's need for oil has not only doubled in the last few years
but is expected to double again within the next 5 years. (The
current price of crude has now settled above $US50 which is up
75% on a year ago. The IMF blames speculators for pushing the
price over $US40).
BALANCE WORSENS
There was a worrying drop in rural exports combined with the continuing
boom in imported goods to cause a massive blow-out in the balance
of payments as announced at the end of last month. No improvements
are predicted for either of those two major contributing factors.
LESS HOUSING COMING
New building approvals continue to fall. Last month's figures
show the reduction in flats to be worst at down 13% from the previous
year whereas conventional housing is down only 1%.
ELECTION
BUSINESS
POLL SPEND WARNING
Forecaster, Access Economics, is warning the economy is about
to enter a slight downturn and with it will come reduced government
revenues. This flies in the face of high-spending election promises
of both major parties which Access says are irresponsible and
unsustainable.
MORE REGULATIONS
The Business Council of Australia's head of regulatory affairs
has criticised the Labor Party's promise to get tough on corporate
cowboys if it wins power. The Council's Steve Munchenberg says
business heads are already well on the way to fixing excesses
but Labor's Stephen Conroy says if elected they will put a number
of reforms in place.
