Australian Rate Debate Clicks on Social Media
By GEOFFREY ROGOW
SYDNEY-Australian financial services company Yellow Brick Road Wealth Management thinks the country's central bank shouldn't raise interest rates and is turning to the Internet to make its point heard.
The company-which offers services such as financial planning, home loans and tax advice-has launched a campaign online called "The RBA appeal" aimed at recruiting hard-pressed consumers to post messages on the social media sites YouTube, Facebook and Twitter. The goal is to persuade the Reserve Bank of Australia to refrain from further rate increases that have clobbered almost everyone here other than the miners.
"The RBA doesn't hear what anyone has to say," said Mark Bouris, Chief Executive of Yellow Brick Road. "They just look at the numbers and make their decision. If they're just going to raise rates, preemptively because of some data, they should also be looking at what people have to say at a granular level."
The campaign coincides with the expectation that a rate rise from Australia's central bank is a near-certainty in the next few months. Of the 20 economists surveyed by Dow Jones Newswires on Friday, all but four forecast an increase by August. As expected, the bank held rates firm Tuesday at 4.75% amid growing signs of a cooling across the Australian economy, which has shrugged off the global financial crisis quicker than other industrialized nations largely due to its wealth in mining resources.
A spokesman for the RBA declined to comment on the campaign. For its part, the RBA preempted its critics taking the debate online by launching its own feed on Twitter in March. It now has nearly 3,400 followers.
Still, the bank has repeatedly stated in public comments that inflationary pressures in the economy could grow in the coming year, a move that would necessitate higher rates from the central bank. At the same time, largely thanks to a mining investment pipeline targeted in the hundreds of billions a year, the central bank forecasts gross domestic product growth of more than 4% next year.
But to cool down the boom through rate rises, argues Yellow Brick Road, would hit many consumers not feeling the benefits of mining-driven growth. So far, that argument has gained some traction with 250 people "liking" the campaign on Facebook in less than a week. The firm's initial YouTube video has more than 1,000 views.
Australia's high levels of home ownership make central bank policy a main street issue here, especially as about 90% of Australian home mortgage loans are at a variable rate. For Australians tempted to buy a home by government incentive programs after the global financial crisis, including a first-time home buyers grant, a string of seven interest rate hikes beginning in October of 2009 have hurt with a recent report from Fitch ratings showing mortgage delinquencies reaching an all-time high last quarter.
