It’s good news but hell, someone has to bother to report it! Yep, arguably, the second most important economic policy body behind the Turnbull Government — the Reserve Bank of Australia, which determines interest rates — put on show its thinking yesterday and the news was OK to pretty good.
Of course, this doesn’t deserve a headline in newspapers but imagine what the headline would be if the RBA downgraded economic growth. If I played the typical media game, I’d say that “Oz economy down the gurgler!” would’ve been a good headline grabber.
On the flipside, a media outlet keen to help their readers (or viewers or listeners) would think good news, which might shore up people’s confidence to buy a house or new furniture or to invest in a business and then employ a whole lot of Australians, would be a good thing to be a part of. You would, wouldn’t you? Is it any surprise that newspapers are struggling as businesses and assets worth investing in? Ironically, Fairfax’s best asset is its Domain.com.au website, which is all based on Aussies being positive and aspirational about their future as a property buyer/investor.
Could we have been reading people/news consumers wrong? They might seem to read negative crap all the time but does it mean they won’t be interested in positive stuff?
I hope I’m right.
Anyway, back to the RBA’s good news story on the economy that creates business opportunities, profits, wages, jobs and helps make dreams of people come true.
So yesterday we saw the RBA’s latest minutes from its last Board meeting, which decided to cut the official cash rate of interest to 1.5%.
Usually a rate cut would signal an economy in trouble but this cut was more linked to very low inflation (which once upon a time was seen as a good thing) and a too-high dollar.
But to me, the big news was the Bank’s view on where the economy is heading and economic growth is the key indicator for that.
This is what the RBA said: “While GDP growth had been stronger than expected in the March quarter, reflecting unanticipated strength in resource export volumes, it was expected to have been more modest in the June quarter. Economic growth was expected to pick up to be above estimates of potential by mid-2017.”
In simple terms, the Bank expects us to grow in the 2.5-3% band until mid-2017 and then we should kick higher, which is great news for job creation if they’re right.
The RBA thinks inflation won’t spike any time soon and the Board was annoyed at the damn dollar staying high, as it was complicating the “adjustment process” following the end of the mining boom.
This was a good news story from the RBA, which even hinted that if the dollar didn’t fall and inflation remains low, then we could see another rate cut.
And another big news story in these minutes was the fact that the Bank is not spooked about house prices. This was CommSec’s Craig James’ take on the subject: “Importantly, the Central Bank has removed concerns of excessive house price growth from its wall of worry – essentially one less hurdle to even lower interest rates in the future,” he concluded. “And with the Aussie dollar drifting higher, it is very likely that policymakers will contemplate another rate cut in coming months. CommSec has a further rate cut priced in for November.”
By the way, to add to the good news, the ANZ/Roy Morgan consumer confidence rating rose by 2.5% to 117.6 in the week to August 14. Confidence is up 3.9% over the year and well above the average of 112.4 since 2014.
So the summary is: our economy is growing well but should get better in coming years which will help job creation, a further rate cut looks likely, and we shouldn’t be worried about rising house prices because the country’s second most important policy body isn’t!
OK, I’ll run with that and start thinking about how I can get an advantage out of being positive about our economic future. Given how too many people are being programmed to be negative by the media and humanity generally, this could prove to be my competitive advantage.
I have to admit, it has worked to date!
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