Chris Richardson of Deloitte points out there's a lot of money being dropped onto Australia through higher commodity prices. And this he says is contributing to higher inflation by way of skill shortage and rising wages.
Why are commodity prices higher? Baltic Dry down, demand slowing. My point is through rate hikes there's an unwanted guest the RBA has invited which is the risk appetite AUD buyer. The obvious scenario here is unforseen upward pressure on AUD a result of a few whammies colliding at the same time.
So almost purely by forex our export commodity prices are through the roof. To hedge this our biggest trading partners are buying up Aussie. Its a false impression of value.
The risk appetite AUD buyers are liking the margins between our 4.75% cash rate and the likes of EUR 1.25%, USD 0.25% JPY 0.10% GPB 0.50%. This also adds to the false impression of AUD value.
Our economy is ticking 'property' (i thought that was my freudian slip but it was yours lol) which speed economy is that? 1st 2nd or 3rd? Why is our budget decimated? Mining boom yes, based on commodity price speculation only. Which is a mirage of forex anomolies created in the majority by RBA's high cash rate gap compared to the rest of the industrialised world.
If RBA haven't change their spots then we'll see many hikes before they drop 100bps per month consistently when the globe unwinds its AUD positions. Ground hog day a la GFC 1 IMO.
