Interest Rate cuts and why I hate it

A standard macro economic stabiliser is through the governments ability to adjust its monetary policy. This is one method the Australian government has been able to use in its attempts to boost the local economy. The general thinking behind it is quit simple: The biggest money sucker for most households is that of mortgage payments. Changes to the monetary policy allows the government, the Reserve Bank rather,  to cut interest rates in order to, among other things, reduce the payment burden for households (assuming the cut is passed on by the banks). Households then have more money, hopefully now they go out and spend more and therefore improve lead to a boost in the economy. Simple really and full credit to the Aussie government being able to have enough elasticity and leeway to be able to use this policy in tough times (take note US!)

Reading the opening paragraph you may be forgiven to believe that I am fully supportive of the rate cuts. I am supportive in a purely objective way but personally it has me frustrated to no end and I’m sure many people have the same sentiment. I was the poor sap who decided to fix the their mortgage when the interest rate was at its highest, concerned about the rate continuing to grow. Now after rate cut followed by more rate cuts the interest rates are the lowest since the 60’s! Since the 60’s!

Well before you all jump for joy remember those misguided and unfortunate souls, like me, who locked in one of the highest rates in history during a time when they are at the lowest in almost half a century. Then jump a little more… I would!