2013 July Australian Economy and Interest Rate

At its meeting today, the Board decided to leave the cash rate unchanged at 2.75 per cent.

Confidence is the key

Australia continues to be recognised as one of the safest and most stable economies in the world. Its banks continue to record profits that are fading memories in other nation's banks.

Our balance of trade was still in positive terms, mainly due to the resource sector. However the strength of our economy had caused Australian manufacturers to suffer pricing problem on the export market.

A lot of history and painful experience has gone into making our economy this strong and we owe a huge debt of gratitude to those who made brave and unpopular changes decades ago.

Then why is Australian business still dragging its heels. The Mining sector continues to lead and underpin the economic growth in Australia. Why are other businesses still struggling?

The Westpac Bank Consumer Confidence Survey shows a slight increase for the month of June. But this slight increase is not enough to revive the flagging economy.

The survey did show however, that most people believe that now is a good time to make major purchases, such as property.

There is the old adage that you should buy at the bottom of the market and sell at the top.

Traditionally the period leading up to an election is a period of uncertainty which leads to a reduction in consumer activity.
Australia has been in that pre election mode for four months now with the additional turbulence of the recent change (again) in Prime Minister.

What is needed now is an election, and whilst most people will have their own views about which party will do the best job, what is needed is Governance that is willing to forgo populist policies and instead do what is needed to revitalise the economy.