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Australians need to save more for the economy to avoid a more rapid run-up in inflation, triggered by nation’s rising terms of trade, the Reserve Bank said today.

“In putting together the Reserve Bank’s forecasts it has been assumed that more of this boost to income is saved than was the case in the earlier boom in the terms of trade,” RBA assistant governor Phillip Lowe.

“This reflects two factors. The first is the different position of the federal budget and the second is the more cautious approach to spending currently being displayed by the household sector.”

The federal budget, handed down this week, contained no major increases in public spending and is expected the return to a surplus by 2012-13.

In that time, the RBA forecasts Chinese steel production will continue to drive demand for Australian iron ore and coal strong, boosting the nation’s terms of trade.

Terms of trade are the prices of a nation’s exports relative to its imports.

“If this lift in saving does not occur, then demand in the economy could well be stronger than forecast, and this would put additional pressure on capacity,” he said.

A lack of spare capacity in the economy has pushed the year-to-March inflation figure to 2.9 per cent from 2.5 per cent in the year to December, which surprised the RBA, Mr Lowe said.

“Disinflationary forces in the economy are not quite as strong as previously expected, largely because the economy has performed better than previously expected,” Mr Lowe said, in the speech delivered to Colonial First State Investment Forum in Sydney.

The RBA expects inflation to fall only to 2.75 per cent later this year, less than originally anticipated after the release of the March data.

Retail sales have remained lacklustre since the middle of last year, after the end of the government’s cash stimulus grants to households during the financial crisis. Six interest rate rises since October have also cut into demand at retailers, with a number of businesses including Fantastic Furniture, Clive Peeters and Woolworth’s flagging weaker sales ahead.

The RBA lifted interest rates to 4.5 per cent his month, creating more headwinds for shoppers. The latest rate rise added another $46 to the average monthly repayment cost on a $300,000, 25-year mortgage.

Investors currently foresee no chance of an interest rate rise in June, but predict the official cash rate will be at 5 per cent within a year, according to Credit Suisse data.

The central bank predicts 3.25 per cent economic growth this year accelerating to 3.75-4 per cent growth in the next couple of years, amid rising prices for commodities exports.

Source  :  www.watoday.com.au

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MUM and dad investors will receive generous concessions to park their savings with banks and building societies as part of sweeping tax reforms.

The Rudd Government is preparing to unveil a new savings scheme offering tax breaks similar to superannuation’s discount rate of 15 per cent, The Daily Telegraph reports.

It will encourage investors to deposit savings with the four major banks and other respected financial institutions.

But investors will have to “lock up” their savings — perhaps for between five and 10 years — to qualify for the special rate.

The new savings deal will be announced as part of the Government’s much-anticipated response to the Henry tax review.

It will be part of a suite of measures aimed at building a new savings culture in Australia.

But it is also hoped it will generate billions of dollars in bank deposits, cutting the need for finance houses to borrow from overseas.

The Government expects it will be popular with voters who currently face punishing tax rates on savings. Some taxpayers can pay up to 50 per cent on interest earned from their bank deposits.

Australia is one of the few countries in the world to tax bank savings at the full rate.

Among key reforms, taxpayers will be able to lodge their annual tax returns with a few clicks of a mouse.

And Australia’s antiquated tax system — containing 125 different taxes — will be streamlined to simplify arrangements.

It is understood the Reserve Bank and other financial authorities have raised concerns about the steady decline in deposits.

Bank CEOs have been lobbying Canberra for changes to taxation on ordinary bank deposits, claiming the superannuation industry gets a huge advantage.

And they have a strong ally in Treasury boss Dr Ken Henry, who has also raised concerns over the punitive rates faced by those who save with banks.

Source  :  www.news.com.au

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I know if Jane were here today, she would have been so happy to see that so many Australian women and their families are being helped by the work the McGrath Foundation is doing each day.

Executive Director of the Foundation TracyBevan                                                                                                                                                                                                                                                 

Memorial services will be held across the nation today to honour breast cancer victims including Jane McGrath, one year after her death.

The McGrath Foundation, led by her husband and former cricketer Glenn McGrath has raised more than $5.5 million for cancer research.jane McGrath

Jane and Glenn co-founded the McGrath Foundation in 2002, to raise money for breast cancer nurses and to raise awareness about the disease.

The cancer campaigner lost her own battle with cancer on June 22 last year, sparking an outpouring of grief.

Today memorials will be held in the Art Gallery of NSW and at other sites across Sydney, as well as in Newcastle, Melbourne, Adelaide, Brisbane, Perth and Canberra.

Executive Director of the Foundation Tracy Bevan says it’s a significant day.

“Today is a hard day for us, but it’s also a very proud day. I know if Jane were here today, she would have been so happy to see that so many Australian women and their families are being helped by the work the McGrath Foundation is doing each day.”

The foundation currently has 45 McGrath Breast Care Nurses working in health care facilities across the country, with another eight to be placed in coming months.

Source  www.livenews.com.au

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Gordon Ramsay, winner of Best Food Program and TV PersonalityListen to the real man behind the television personality as Gordon talks about weathering the tough times and how the belief in yourself can pull you through. With personal anecdotes of his success and his failures, Gordon will dish up his advice and where he sees the future for Gordon Ramsay. 

Be ready with your questions from 8.30am to get some of your own personal advice from the award winning Chef who currently has 25 restaurants in his empire, not counting the soon to open Maze in Melbourne.

www.pcec.com.au

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