Invest
‘Extraordinary skill’ needed in Aus economy management
With Australia on the edge of its seat as the August cash rate call looms, one economist has praised the RBA for its “extraordinary skill” in managing Australia’s economy until now and enabling 28 years of continuous economic expansion.
‘Extraordinary skill’ needed in Aus economy management
With Australia on the edge of its seat as the August cash rate call looms, one economist has praised the RBA for its “extraordinary skill” in managing Australia’s economy until now and enabling 28 years of continuous economic expansion.
Erik Norland, the executive director of CME Group and a senior economist, said the RBA “will have to continue operating with extraordinary skill to see its way out of Australia’s twin problems of excessive household debt and high housing prices”.
Mr Norland highlighted that “no developed economy has matched this track record over the same period and only a few emerging market nations, like China, can claim to have had longer expansions”.
Predicting that a 2008-style US financial meltdown is “not on the immediate horizon for Australia”, the economist explained that “the US real estate bubble didn’t pop by itself”.
“The Fed had a hand in it by raising rates 17 times between mid-2004 and mid-2006,” he continued.
By contrast, Mr Norland said the RBA is taking the opposite approach, “preventively easing policy, apparently in the hopes of stabilising real estate prices and preventing a rapid decline in the real value of residential property that would impair the value of the banks’ collateral on residential mortgages”.
Considering, too, the potential for a fall in commodities prices based on Australia’s heavy reliance on commodities “with extremely volatile prices”, the economist said “even if Australian debt is too high and if commodity prices do in fact slide, that doesn’t necessarily mean the end of Australia’s 28-year expansion is nigh”.
Rather, Mr Norland considered that it would more likely mean “continued easing from the RBA and a weaker AUD, both of which may insulate the Australian economy and extend the expansion even under otherwise unfavourable external and internal conditions”.
This email address is being protected from spambots. You need JavaScript enabled to view it.
About the author
About the author
Commodity
Australians protest ‘nonsensical’ gas-led recovery
Advocates for climate action have marched in Canberra, demanding that the government remove its plan for a fossil fuel-dependent economic recovery. ...Read more
Commodity
2021 to kick off 3-year-long investor heaven, property investors predict
Property investors unanimously agree that 2021 will kick off a three-year favourable investor environment with strong price growth. ...Read more
Commodity
Joining the buyers club: How to build a hefty passive income in your 20s or 70s?
“2021 is going to be the year of low stock levels, low interest rates, increased confidence and the chase for yield as people look to replace their incomes.” ...Read more
Commodity
How this investor entered the market 4 years after the last boom
Although he looked to capitalise on Sydney’s property boom a decade ago, luck would have it that Rizul Makkar would only begin to build his property portfolio four years later. ...Read more
Commodity
Electricity price hikes are coming, expert warns
The opening of Santos’ Narrabri gas pipeline will likely see consumers pay a higher price for gas, an expert has said. ...Read more
Commodity
Morrison’s technology roadmap slammed
The latest Coalition energy initiative has been slammed by a union body, which claimed that it is a substitute for a coherent national energy climate policy. ...Read more
Commodity
What’s so precious about metal?
As countries continue to battle the COVID-19 health pandemic, investors are turning to the safe havens of precious metals — a trend that’s likely to continue, according to an expert. ...Read more
Commodity
Global chocolate consumption melts on COVID-19 outbreak
The COVID-19 crisis has taken a bite out of chocolate sales, collapsing the price of cocoa, according to new research. ...Read more
Commodity
Australians protest ‘nonsensical’ gas-led recovery
Advocates for climate action have marched in Canberra, demanding that the government remove its plan for a fossil fuel-dependent economic recovery. ...Read more
Commodity
2021 to kick off 3-year-long investor heaven, property investors predict
Property investors unanimously agree that 2021 will kick off a three-year favourable investor environment with strong price growth. ...Read more
Commodity
Joining the buyers club: How to build a hefty passive income in your 20s or 70s?
“2021 is going to be the year of low stock levels, low interest rates, increased confidence and the chase for yield as people look to replace their incomes.” ...Read more
Commodity
How this investor entered the market 4 years after the last boom
Although he looked to capitalise on Sydney’s property boom a decade ago, luck would have it that Rizul Makkar would only begin to build his property portfolio four years later. ...Read more
Commodity
Electricity price hikes are coming, expert warns
The opening of Santos’ Narrabri gas pipeline will likely see consumers pay a higher price for gas, an expert has said. ...Read more
Commodity
Morrison’s technology roadmap slammed
The latest Coalition energy initiative has been slammed by a union body, which claimed that it is a substitute for a coherent national energy climate policy. ...Read more
Commodity
What’s so precious about metal?
As countries continue to battle the COVID-19 health pandemic, investors are turning to the safe havens of precious metals — a trend that’s likely to continue, according to an expert. ...Read more
Commodity
Global chocolate consumption melts on COVID-19 outbreak
The COVID-19 crisis has taken a bite out of chocolate sales, collapsing the price of cocoa, according to new research. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
