Who do you believe?
I am on a roll with my former employer at the moment however it is hard to avoid making comments on the ANZ CEO’s position given his high profile in the news. Yesterday Mike Smith told the RBA to hold off on further rate cuts due to a potential housing bubble and business confidence soaring. In another article in the same paper the IMF predicts risks ahead for the Australian economy given unemployment is now heading to 6%, slow global growth, and our budget deficits. Now I am no economist but I do know what is happening on the ground as I talk to home mortgage owners, accountants, business people, family & friends, and that is many people are struggling with their day to day living costs. Refinancing and restructuring of debt is now top of mind for borrowers because reducing your mortgage payments is one way of lowering your cost of living or improving business margins, and this is a perfect time to lock into historically low interest rates. So who is right? Well, I think the IMF, and until we gain confidence, Mr Smith comments are concerning because I think a another rate cut or possibly 2 is needed.