RBA SPEECH IN MATUSIK SPEAK
The RBA guv, Philip Lowe, delivered an important speech last week titled, “The Labour Market and Monetary Policy”.
Go here to review.
And for those with a life, here’s what it means in Matusik speak.
- The RBA is in no rush to do anything – that’s lift or cut interest rates. What a great job to have!
- Yet, household debt is rising much faster than income. So sometime in the future things economic might get a bit wobbly. Crash and burn if we aren’t careful, if you ask me.
- An increase in official interest rates overseas doesn’t mean we have to do likewise. No, we will just let the banks do the heavy lifting for us.
- In fact, if a big wobbly comes, we still have room to drop the cash rate further. That won’t really do much, but we will do our best to time it just before the next federal election.
- Inflation isn’t going anywhere; investors will still borrow to buy assets; more will look towards yields rather than capital growth. Just expect tighter loan to valuation ratios: think 20% equity for the safer stuff and up to 40% for high-rise apartments.
- The trend towards more part-time work is to continue, as we move towards a more service-sector dominated economy. There will be some wage winners here, but most new jobs will attract low rates of pay. Shite!
- Future generic wage growth is likely to remain subdued. In short, in the toilet. Why? The service industry is bloody competitive.
- Overall wage growth will only come from improving productivity. So, stop reading now and get back to work.
But before you go – visit here – and check out our new Australian Pulse Point report and help us fight the good fight! Down with all you slack arses reading Missives for free. Pay us some coin and help us, too, to continue living beyond our means. We, and the RBA, say thanks.
Keen to hear your thoughts.
Until next time,
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