Has Australian Inflation peaked?
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The Australian Bureau of Statistics revealed yesterday that annualised inflation had hit 5% in the September quarter. Excluding volatile items it was 4.6% still well above the rate the RBA have traditionally been happy to accept.
The RBA have indicated that the likely pressure on inflation will disappear through 2009 as slowing ecomonic growth, consumer demand and increasing jobless figures help drag down the inflation rate.
But the question begs what if the inflation risk does not disappear in 2009. We are likely to see as much as 1.5% come off interest rates in the next 12 months, perhaps more should the economic climate deteriorate further than expected. This would take the RBA cash rate down to 4.5%.
If inflation continues to persist as some economic forecasters speculate then the Australian and world economies could be heading for a disaster. The jury is still out at this stage but economic forecasters are sitting on both sides of the fence.
Do you think our inflation rate has peaked? Share your thoughts in our comments section.
Bank Deposit’s guarantee still on Australian agenda
After the recent announcement by the Australian Federal Government that they will guarantee all bank deposits comes an indication that banks or customers will be charged an insurance premium whether they like it or not to secure their money if they have in excess of $1 million.
Wayne Swan indicated that investors will not be able to opt out of the option.
No indication was provided on if the premium would differ depending upon the stability of the institution.
In recent days money has spilled from investment companies into the leading banks as the government announced that all bank deposits would be protected. The ongoing speculation of who would and would not be covered has dealt a heavy blow to some funds.
Do you think an insurance premium should be paid to secure a bank deposit in excess of $1 million? Should people be given a choice to opt in or not?
Please share your thoughts in our comments section.
Australian jobless rate forecast to skyrocket by 2010
JP Morgan’s Australian chief economist Stephen Walters has forecast the Australian jobless rate to double by the end of 2010 to 9% as over 1 million people are out of work. This would be the highest level since 1994.
Walters forecast comes on the back of growing insecurities surrounding the domestic economies growth rate and the ongoing world slowdown in particular in China.
With China showing signs of a slowing economy from the previous breakneck growth rates in excess of 10% the world slowdown is likely to take a heavy toll particularly on economies like Australia who have leveraged off the Chinese economy.
Walter indicated a that the domestic growth in the economy would fall to 1.4% in 2009 as the growing slowdown in China takes hold.
The grim predictions bode well for further rate cuts as the domestic markets have priced in a forecast 50 basis point cut in the next month or two.