Interest rates

first_imgThe recent decision by the Reserve Bank of Australia (RBA) to hold official interest rates at their current level of 4.5 percent, is a bonus for Australians borrowing to buy their homes. We could possibly get through 2010 without another change to official interest rates.And because of the way so many small and medium sized businesses are financed off the family home, it could also be good news for business owners. However, we’re now in August and it’s worth trying to pinpoint where we are in terms of the trend line for interest rates. I’m predicting that we’re currently in a pattern of holding on official interest rates. I say this because there’s an election this month and the Reserve typically likes to avoid political entanglement (even though they say it makes no difference to monetary policy). Also driving my optimism is that the last interest rate rise in May – which took the official rate to the current 4.5 percent – was the sixth in a series. I have no reason to say that six is a magical number indicating a complete interest rate cycle, but I can say that the six rate rises were aimed at controlling the inflationary threat from the Rudd stimulus spending, and that the rate rises seem to have succeeded. Which brings us to the third main reason why I think the RBA is in no hurry to raise the official rate again soon, and that is the often ignored subject of inflation – a subject we should not overlook given that controlling inflation is largely why the Reserve changes official interest rates. The current headline rate for Australian inflation is 3.1 percent. Since the RBA aims to keep inflation within the bounds of two and three percent, 3.1 per cent may look like a failure, but it isn’t so. The Reserve averages the inflation numbers over an entire cycle and the fact that the RBA has not changed official interest rates this week means they are not concerned. Moreover, the RBA is looking at the detailed inflation data which comes in a quarterly series, the most recent of which was the June quarter inflation numbers. This quarterly series had annual inflation at 2.7 percent (after adjustments that take the anomalous rises out of the equation) and more important, a downward trend for the quarter from 0.8 percent to 0.5 percent. So, when interest rates go up and down we must remember that they largely move to ensure inflation is kept between two and three percent. We will know more when the September quarter figures are published. But for now inflation seems to have stabilised after the spending stimulus, and we could possibly get through 2010 without another change to official interest rates. Mark Bouris is the Executive Chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting & tax and insurance. Email Mark on [email protected] or check www.ybr.com.au for your nearest branch. Facebook Twitter: @NeosKosmos Instagramlast_img read more

Continue reading

Over 60 ecigarette smokers want to quit

first_imgOver 60 per cent e-cigarette users want to quit smoking and over 25 per cent smokers have already tried to stop using the electronic device, says a new study. In a study, the researchers observed that most smokers don’t want to use e-cigarettes forever and wish to stop using it exactly the same way a traditional smoker tries to quit smoking. “Most of the discussion about e-cigarettes has focused on the relative harm as compared to traditional cigarettes, the efficacy of e-cigarettes as a cessation device, and the alarming increase of their use in children,” said the researchers. Also Read – Add new books to your shelf”Our data suggests that e-cigarette users do not want to use these devices forever. Eventually, they want to stop using e-cigarettes the same way a traditional smoker wants to quit smoking cigarettes,” Steinberg added. The study highlighted that the smokers tried several strategies including medications, counselling and social support to stop using e-cigarettes. “The strategies that people reported using to quit e-cigarettes include many of the strategies we recommend for quitting traditional cigarettes such as FDA-approved nicotine replacement products or medications, counselling and social support,” said study author Rachel Rosen, a student at the University. Also Read – Over 2 hours screen time daily will make your kids impulsive”While e-cigarettes may be associated with reduced harm as compared to combustible cigarettes, they also are potentially addicting and the e-cigarette aerosol still contains toxic substances,” she said. As e-cigarette use continues to increase and as more e-cigarette users want to quit, the researchers believe that it will be necessary “to be ready to help those who may have difficulty stopping on their own”. About 10 million US adults smoke e-cigarettes. Most of them smoke traditional cigarettes too. Several users say they used e-cigarettes in an attempt to quit traditional cigarettes.last_img read more

Continue reading