Australian Economy

Here's commentary by market analysts Macquarie Research Equities about the RBA (Reserve Bank of Australia) and Interest Rates. They talk about the current issues about the Australian interest rates and monetary policy. There may be a possible interest rate rise next month.

RBA – The Interest Rate Factor

The Australian sharemarket as well as international stockmarkets have been in bull mode for a while. The twentieth anniversary of the 1987 stockmarket crash is today: October 19th. The Australian economy has seen four years of continuous growth. So what's going to happen to our booming Australian economy? What are all these signals telling us?

Economic History 101

Did you know, today, Friday October 19th 2007 is the 20th anniversary of the history making, record breaking October 1987 market crash. Back in the 1980s global stocks and the Australian economy were booming after the early 80s recession, economic reform ad deregulation and re-rating of shares as a result of lower inflation. Australian shares nearly doubled in a year to the September 1987 high which was strongly supported by entrepreneurial stock gains. The American stockmarket peaked a month earlier in August. On October 19th the US stockmarket fell 20 percent and the Australian market followed the trend dropping 25 percent on the next day's trade (October 20). From pre-crash highs to their lows, the American stockmarket fell 35 percent and the Australian sharemarket fell by 50 percent. It took the USA stockmarket two years to recover and surpass previous highs while the Australian sharemarket took a little longer to recover: it only surpassed highs made in 1987 in February 1994.

If you ave been living under a rock, I would like to inform you that the Reserve Bank of Australia (RBA) has lifted the official cash interest rate by 25 basis points to 5.75 per cent. If you live in Australia basically the main stories this week are the poor men that are trapped in a gold mine in Tasmania and the impact of the Australian interest rates on the economy as well as the hip pocket of households. But the question lies - what is the impact for share traders? I'm a little busy this evening and tomorrow, but I promise I'll write a blog entry about the Australian interest rate rise.