Interest rates

INTEREST rates have fallen to 4.5 per cent, providing a massive boost for struggling households and the retail sector ahead of Christmas.
The Reserve Bank of Australia today Tuesday Nov 1 slashed rates by 25 basis points in a bid to boost consumer spending and turn around the depressed property market.
Most of Australia's biggest home lenders cut mortgage rates soon after the central bank reduced the cash rate for the first time since April 2009, and many of the country's small lenders followed suit.
Westpac  and Bank of  Qld will lower their standard variable home loan rate (SVR) to 7.61 percent.Commonwealth Bank (CBA), Australia's biggest home lender, followed suit, cutting their SVR to 7.61 per cent
Prime Minister Julia Gillard earlier warned the banks that they had "no excuse" if they failed to pass on a likely interest rate cut to customers.
A fall in interest rates to 4.5 per cent has given homeowners a $600 reduction on annual mortgage repayments for a $300,000 loan.New home sales have declined in September, with detached house sales falling to their lowest point in 11 years, according to the Housing Industry Association.
Monetary policy is arguably the most powerful economic tool in modern open economies but interest rate cuts still take time to boost the economy 

What goes up.....

This commodity price chart squares with what RBA Governor Glenn Stevens has said about Australia at this point in history. Namely, the increase in the terms of trade and in commodity prices is historic and “structural”. If that’s the case, then this period where the Aussie market is influenced by debt woes in Europe and America ought to be transitional. There ought to be a point at which Australian stocks are more correlated to Asian and Chinese growth.

--But we don’t seem to be at that point yet. We seem to be at a point where credit writedowns and the contraction of global credit are leading investors to be pretty bearish about growth. You don’t pay a lot for stocks when you aren’t convinced they’ll grow earnings.