HEY HEY, IT'S NEVER BEEN CHEAPER: MONEY
In a bid to stimulate the moribund local economy, the Reserve Bank of Australia has pushed the interest rate to its lowest ever level. At 0.1 per cent, it is now just a smidgen above nothing, meaning it has never been cheaper to borrow money.
When put together with the instant asset write-off scheme, it means printers have never had it so good when it comes to investing in new, or for that matter preowned, equipment.
In more good news the Bank said it anticpated low interest rates remaining for at least the next three years.
The RBA is also is embarking on a six month $100bn investment in the local economy, through purchasing government bonds, scheduling to buy $5bn of bonds a week every week for the next six months, with 80 per cent in commonwealth bonds and 20 per cent in state bonds.
And in a heartening statement the Reserve Bank governor Philip Lowe said dire predictions about the economy were way off the mark, with GDP now set to grow by 6 per cent to June next year, unemployment to peak at below 8 per cent, and inflation to be just 1 per cent next year.
Andrew Macaulay, CEO of Print & Visual Communication Association said: "If a printer has assets and cash flow, there has never been a better time to borrow and invest in productivity equipment."
Kellie Northwood, CEO, The Real Media Collective. said, “Whilst the interest rate cut from the RBA is welcomed to assist the economy, we do remain cautious that it will be passed on in full by financial institutions. Having said that, more critically is the commentary from the RBA that this rate cut is predicted to hold for three years. This commentary provides industry, including the print sector, confidence that low interest rates will hold throughout the Covid economic recovery period."
Peter Harper, CEO of Visual Connections, said the interest rate cut is a mixed blessing for businesses in the sector.
"Lower interest assists businesses who need to borrow money, by tending to make funds more accessible and, of course, affordable," he said.
"And it also usually causes the value of the Australian dollar to drop, removing some of the incentive for people to purchase print overseas. Balancing that, however, is the fact that most of the equipment and products our industry uses are imported, so this could actually increase the cost of capital investments and ongoing consumable costs to businesses.
“In that sense, it’s very much a double-edged sword. In as much as it is designed to stimulate the economy and increase domestic consumption, we would hope to see some of that activity flow through to the sector.”
The RBA said the latest action was taken primarily to lower the cost of borrowing to stimulate the economy.
Governor Lowe said, "The combination of the RBA's bond purchases and lower interest rates across the yield curve will assist the recovery by lowering financing costs for borrowers; contributing to a lower exchange rate than otherwise; and supporting asset prices and balance sheets.
Interest rates have been steadily falling from 7 per cent just prior to the GFC and 5 per cent a decade ago, down to three quarters of a per cent a year ago, down to today’s record low.