INTEREST RATES OUTLOOK

RBA HOLDS AT 5.5%
The board of the Reserve Bank of Australia has held firm with the basic cash interest rate remaining at 5.5 percent.

RATES AND THE ECONOMY
The RBA meetings have now become a public football with all manner of players rushing into the media with advice for the board's monthly decision.

Whereas most observers agreed that higher oil prices with softer consumer spending and a reduction in housing demand were evidence of the heat being taken out of the economy so negating the need for a rise, others were a lot more direct. Respected economist, Access Economics, came out the day before the meeting describing the RBA as getting it wrong in both keeping rates too low for too long only to raise them too late so further forcing a slow-down. The company says both the housing and retail industries will suffer from their already low position.

A government spokesman described the decision as an endorsement of the economy’s strength which has enjoyed 13 years of continual growth, the longest on record. Westpac’s senior economist reacted to today’s news with a warning that the current situation is only temporary and a rise could be forced within a few months. Meanwhile, new car sales continues to break all records with March results posting another high and the industry now boasting a million sales this year.

BUSINESS NEWS

GST TAKE BOOMS
Federal Government figures are now revealing how the GST take has sky-rocketed. From $24.4 billion in the first year 2000-2001, the amount as risen to $31.7 billion in 2003-2004, just three years later. This shows an annual increase averaging nearly 10 percent.

CONSUMING CARS, COMPUTERS, PHONES
The latest ACNielson survey into car ownership rates puts Australia joint second with Italy at 90 percent of over 16 year olds, behind the US lead at 92 percent. Another survey released last week shows within a month the amount of people on the net globally will reach a billion. But later this year the total number of mobile phones in use will reach 2 billion. Obviously the growth of the latter continues to amaze analysts.

BUSINESS OUTLOOK

WHERE NOW OIL PRICES
Last week's much publicised warning by Goldman Sachs that oil could spike to over $US100 per barrel this year undeniably helped its current price approach $US60. But Bloomberg has taken other action by surveying a range of oil industry analysts who are convinced that increased OPEC production matched with the end of the northern hemisphere winter will eventually force a reduction.

BANKS CHANGE DIRECTION
As the housing market further softens, so the nation’s large banks have acted to continue their growth by redirecting their marketing into acquiring other areas of asset growth. A big push planned for 2005 is towards lending more money to small to medium enterprises for expansion. This will have to be carefully managed as a KPMG survey has found nearly half of the business owner managers in this SME sector are dissatisfied with present banks and are willing to consider switching to new service providers.

BUILDING & PROPERTY
The current boom in development will set a new record as commercial construction companies are set to spend over $20 billion this financial year. A survey has revealed that it is all systems go for the foreseeable future with only speculative apartments not enjoying good growth.

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