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
Is crypto getting the shaft for a big gold re-polish?
While the spotlight shines on trendy cryptocurrencies, investors evidently haven’t lost interest in traditional and tangible commodities like precious metals. ...Read more
Commodity
Morrison’s gas-led recovery sees manufacturers ‘held to ransom’ by gas cartel
Australia’s manufacturing sector and its workers are being ‘held to ransom’ by the gas cartel, despite the Morrison government promising cheap gas as a key policy in the COVID-19 recovery plan. ...Read more
Commodity
‘Investors should take note’: Gas-led recovery to lead to stranded assets
Australia’s gas-led economic recovery could be relying on inaccurate financial assumptions, new research has revealed. ...Read more
Commodity
Credibility up in flames as government opens 21 new gas and oil exploration sites
Climate groups are saying the Morrison government lacks any credibility when it comes to climate change after it announced 21 new gas and oil exploration areas. ...Read more
Commodity
Morrison urged to drop gas-led recovery after new global warning
The International Energy Agency has found that countries like Australia need to transition their energy grid within 14 years to reach net zero, defying Prime Minister Scott Morrison’s gas-led econom...Read more
Commodity
Taxpayers to bear brunt of Morrison’s $2bn pledge to oil refineries
Taxpayers are set to be on the hook for up to $2 billion over the next decade as the government commits to protecting two oil refineries. ...Read more
Commodity
Government unveils $1bn energy deal
The Morrison government has announced a $1.1 billion energy and emissions agreement between the federal and South Australian state government. ...Read more
Commodity
Australia can get rid of coal without prices skyrocketing
Australia’s transition to renewable energy is unlikely to create unaffordable electricity prices or come at the risk to reliability, with policymakers urged to generate the majority of power from re...Read more
Wrapping up an eventful 2021
Listen now
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
Commodity
Is crypto getting the shaft for a big gold re-polish?
While the spotlight shines on trendy cryptocurrencies, investors evidently haven’t lost interest in traditional and tangible commodities like precious metals. ...Read more
Commodity
Morrison’s gas-led recovery sees manufacturers ‘held to ransom’ by gas cartel
Australia’s manufacturing sector and its workers are being ‘held to ransom’ by the gas cartel, despite the Morrison government promising cheap gas as a key policy in the COVID-19 recovery plan. ...Read more
Commodity
‘Investors should take note’: Gas-led recovery to lead to stranded assets
Australia’s gas-led economic recovery could be relying on inaccurate financial assumptions, new research has revealed. ...Read more
Commodity
Credibility up in flames as government opens 21 new gas and oil exploration sites
Climate groups are saying the Morrison government lacks any credibility when it comes to climate change after it announced 21 new gas and oil exploration areas. ...Read more
Commodity
Morrison urged to drop gas-led recovery after new global warning
The International Energy Agency has found that countries like Australia need to transition their energy grid within 14 years to reach net zero, defying Prime Minister Scott Morrison’s gas-led econom...Read more
Commodity
Taxpayers to bear brunt of Morrison’s $2bn pledge to oil refineries
Taxpayers are set to be on the hook for up to $2 billion over the next decade as the government commits to protecting two oil refineries. ...Read more
Commodity
Government unveils $1bn energy deal
The Morrison government has announced a $1.1 billion energy and emissions agreement between the federal and South Australian state government. ...Read more
Commodity
Australia can get rid of coal without prices skyrocketing
Australia’s transition to renewable energy is unlikely to create unaffordable electricity prices or come at the risk to reliability, with policymakers urged to generate the majority of power from re...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
