Can you name Countries where its bank rate is higher than in Australia?* Also why is it our cash rate set by the Reserve Bank of Australia is so high at 4.25 per cent? Its certainly causing major difficulties in established manufacturing industries with many redundancies and closures being continually announced.
So is it inflation? Don't think so as this seems to be under control and within the Reserve Banks range. So what? Some analysts believe it is to subdue and curtail capital growth in the housing sector and this seems to be the case with little growth over the last many months. There is also substantial financial debt in this sector and this may be one way to control it.
However, this seems to be a high price for our manufacturers and those also exporting their goods. Just think of how much more revenue our minerals and resources sector could be generating if the Aussie dollar was say below parity with the US dollar also assisting tourism and manufacturing.
Its likely that a cut to the cash rate is coming in May but investment property investors should not be expecting a high level of capital growth during the next year. What maybe expected is continual rental growth giving higher rental returns on investment property and with property developers under delivering on new housing stock.