Why does Adam Carr suggest that the message is inconsistent? Is there a good reason for this?
http://business.smh.com.au/business/rba-optimism-grows-20090721-drfi.html
Do you think this article reads as one of pessimism, caution, or optimism?
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3 comments:
The reserve bank has deliberately given an inconsistent message. They want to encourage more spending and economic activity whilst also encouraging investor confidence, but inevitably interest rates rise are on horizon. Adam Carr suggests that this rate rise is immanent, but the Reserve Bank does not want to give the signal. As such, we can be reasonably optimistic about improved conditions however people with large debt might be more pessimistic.
The statistics released so clear signs of optimism in the business sentiment and consumer confidence. With these optimistic figures comes warning of intrest rate increases, due to the amount of global and domestic growth. This provides the RBA with to viable options. They can reduce interest rates to stimulate the economy further, or they can chose to increase rates to grow at a steady rate to reduce the amount of inflation. I think that the message is able to be interpretted in two ways, giving a dual perpective on the changing nature of interest rates.
This article does show some signs of optisim as it is said that there is low/slowing inflation and Australias exports from China have now began to stabilise meaning that there will be more consumption within businesses...although adam carr says that there wont be any 'rates hiked' because the rba itself are not really sure what the future will hold based on speculation. they say that the domestic growth has being doing well but are still not sure on what they will do if inflation rises or if it stays moderate. they say they could cut down rates but adam carr thinks that they wont cut interest rates ..this shows that there is still a bit of pessimism around about how the economy is coping and how it will do in the near future ....
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