Interest rates are at a record low and although the markets had factored in a 68% chance of a rate cut, they didn’t take it well; the ASX 200 fell 50 points from its high on the day of the announcement. That’s a very short-term reaction, but an interesting one. We've reached an inflection point where lower rates don't stimulate elation and spending as the RBA intend. They do the opposite, provoke fear and saving. Clearly, some things are changing. With interest rates, at 1.5% we've entered the world of small numbers. Anyone who's ever paid a 17% mortgage rate will tell you that interest rates are now almost irrelevant. The RBA could move from 1.75% to 0%, or minus 1.5%, and no one is going to change their current spending intentions because of it. Our central bank’s central monetary policy tool has already become pointless. Interest rates simply don’t matter anymore. Read more: (VIEW LINK)
Marcus Padley founded Marcus Today in 1998 and leads the team of analysts and market commentators that publishes a daily stock market newsletter, presents four podcasts and runs an $80m Australian equity fund. He is passionate about educating and...