What Is The RBA Thinking!?

I think since we started the club our predictions on interest rates have been spot on. We gave 2 predictions;

• What the Reserve Bank of Australia (RBA) should do &
• What the conservative RBA will do

Readers will note that the RBA soon had the reputation of "too little, too late". It proved very quick to raise rates just when they should have been lowering. I have a list of all of the mistakes that the RBA have made. Once I printed them out the document came to over 2 meters long!!

What does the future hold?

What will the new governor Philip Lowe be like? Will we expect to see more of the same "too little too late"? Or will we see change? NAB have forecasted that the RBA will soon cut rates to 1 per cent. NAB predict that we will see this by "next year".

This is just drip feeding and not boosting the economy. What we need on the next sitting of the RBA is a bold drop straight to 1 per cent. It should also be with a call for Banks to pass on this rate in full from their rather bloated profits. The treasurer and the Prime Minister should point out that this always happened, when the RBA dropped rates in the past (when we had banking competition). Now we have in my opinion a banking monopoly.

What does this mean?

As we have been preaching it means low rates for longer. I believe it is still not the time to fix my properties. There has been a lot of media talk about the RBA's focus on inflation and whether this is right or not. And whether the focus should shift onto something else.

What should it be?

The focus should be as it should of been the whole time, on jobs! Full employment is at 2.2 per cent not sitting up at 6 per cent. The RBA before its rapid stupid rate jumps had 4.3 per cent unemployment. They now happily ignore their charter and ignore the hundreds of thousands of people without a job - with NO income. Without income and a job you cannot spend. Therefore you can't help create more jobs! We have a vicious circle and an RBA not focusing on its number one charter - full employment.

Have a great weekend lovely people.

Happy Investing,

Kevin Young Club Founder of Property Club