What a long hot summer! We are not even half way through.

The end of the festive season should see a slowing to the drain on finances. It can take several months to recover from the Christmas spending spree, so if you’ve given the credit card plenty of use the best plan for the next few months is control and consolidate.

For many though, more distressing will be the fire and floods that have ravaged parts of Australia. It is comforting to know that most lenders have indicated flexibility with mortgage repayments until things return to normal. These disasters bring the typical Aussie spirit to the fore and offers of help, money and goods flowed in to the affected areas within days.

Widespread losses have been seen in the agricultural industry with knock on effects expected to flow to the Australian economy. How this will affect future RBA cash rate movements is unknown but here is how ANZ’s Amber Rabinov and Katie Dean (ANZ Economics and Global Markets Research) see the RBA adjusting the cash rate in light of the recent events: 

“We forecast the RBA to recommence tightening monetary policy in Q3 2011.  We expect the cash rate to rise to 5.25% by the end of 2011, and to 5.75% by the end of 2012.”

Until next time....