INTEREST
RATES OUTLOOK
RBA LIFTS RATES TO 5.5%
The Board of the Reserve Bank of Australia has lifted official
interest rates at its monthly meeting citing various pressures
in the economy. The basic cash rate has been raised from 5.25
to 5.5 percent, which is the highest for four years. This decision
was made amid some of the most active lobbying seen in recent
times with politicians, industry groups, and economists all airing
their advice.
AUSTRALIAN ECONOMY
The pressures to lift included the trade deficit for the last
quarter blowing out to a record 15.2 billion, consumer spending
levels are far too high against GDP, and borrowings are running
at the highest rate since the late 1980s. Against that, the influences
for no change were business confidence is suffering, home borrowings
are 4.5 percent down on new houses and 21 percent down on apartments,
and higher interest rates will push up the dollar which will in
turn make exports less competitive and so worsen the trade deficit.
REACTIONS
Reacting to the move, Harvey Norman's Jerry Harvey insists the
small increase will have no effect on consumer spending levels,
and Westpac's Bill Evans says the new rate should not cause too
much house price panic as this increase is tipped to be the first
and last for a while. Meanwhile, the stock market high continues
with stock prices hardly affected.
GROWTH SLUMPS
Shortly after the RBA announcement came today's statement on national
accounts. It showed a disappointing slow-down in Gross Domestic
Product with only a 1.5 percent rise for 2004 with the last period
registering just 0.1 percent growth. This endorsed many forecasts
of how the economy slowed late last year but few expected such
a low annual growth rate. Accordingly, many economists are now
insisting the RBA got it wrong.
BUSINESS NEWS
GP SPENDING UP
This weekend’s Grand Prix has received record spending from
the corporate sector. Around 80,000 business people will attend
over the four-day event which is costing $26.5 million, a million
more than the previous top spend.
RECESSION PROOF
When direct mail and telemarketing group Salmat reported a 35
percent increase in half-year profit, a director declared the
business to be ‘recession-proof’. And on the same
day, another bumper result was put in by traffic camera maker,
Redflex Holdings, which reported a 413 percent increase in mid-term
earnings.
ADVERTS EVERYWHERE
If you think your TV and newspaper seems full of commercials,
you're right. The business is booming with the Federal Government
now a major player. Coles Myer heads this year's list with $175
million ahead of Telstra at $108 million, the Federal Government
at $97 million and Woolworths at $92 million. The biggest individual
increase came from the Canberra purse with a 45 percent lift over
its spending the previous year.
SUPER $600 BILLION
The latest figures on the total amount of retail and wholesale
superannuation is close to $600 billion according to DEXX&R
research. Heading the strongest growth performers were BT Financial
Group 43 percent, Asgard 42.6 percent and Colonial First 27 percent.
To find out more about the benefits of Debtor Finance
please contact Oxford direct on 1800 850 509. Alternatively visit
www.oxfordfunding.com.au.
