Finance
Dark side of RBA interest rate cut millions are waiting for: ‘Disaster’
A top economist has warned Australian mortgage holders they could face interest rate hikes later this year should the Reserve Bank of Australia (RBA) cut interest rates today. The central bank is expected to cut the cash rate from its high of 4.35 per cent, marking the first time rates have been lowered in more than four years.
Judo Bank chief economic advisor Warren Hogan told Yahoo Finance it was still too early for the RBA to cut interest rates and the board risked driving up inflation before it was under control. Headline inflation eased to 2.4 per cent annually in December, while underlying inflation slowed to 3.2 per cent annually. This was its lowest in three years.
“It might sound attractive to a lot of Australians with mortgages to get a rate cut or two and save $50 a month in the short-term over the next six months, maybe even 12 months,” Hogan said.
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“But if that puts at risk rates going up by a percentage point or two, and then having to come up with actually not just that $50 back, but then another $100 or $150, do they really want that $50 right now and then putting at risk that it’s going to go up later?”
Hogan said the economy was recovering, with private sector demand starting to accelerate, strong employment, a jump in job vacancies, low unemployment and strong consumer spending.
“If you cut just as the economy is picking up and before inflation comes down, you risk not only stopping inflation coming down, but inflation going back up again, and then having to raise rates and not just a few times, a lot,” he said.
“That’s the disaster situation that we really must avoid, is rates going up a lot from here.”
Do you have an interest rates story to share? Contact tamika.seeto@yahooinc.com
Hogan said this “disaster situation” could play out very quickly and the RBA could be forced to hike the cash rate to 5 per cent through 2026.
“What worries me is that a rate cut now lays the foundation for what we know all through history of the disaster, which is that inflation starts to rise again and they’ve got to really jack rates up until it really hurts,” he said.
“Of course, that’s when people who are vulnerable get hurt.”
Hogan said the RBA also risked damaging their credibility if they ended up needing to hike interest rates again to bring down inflation.
“It’s very important for central banks that people believe them when they say they’re going to get inflation down and keep it there,” Hogan said.
Finance
Las Cruces finance director gets national honor for ‘exceptional contributions’
EL PASO, Texas (KTSM) — The City of Las Cruces’ finance director has received a national honor recognizing “exceptional contributions to public finance and local government service,” the City said.
Finance Director Lesley Doyle was selected by the Government Finance Officers Association (GFOA) to receive the organization’s “Recognition for Outstanding Public Service.”
The award recognizes Doyle’s leadership during a critical financial period for the City.
She stepped into the role of finance director as the City’s FY25 audit identified a projected beginning balance shortfall of more than $10 million in a community of nearly 120,000 residents, the City said.
Doyle led a coordinated effort to communicate the financial situation clearly to City departments, executive leadership, and the City Council, while working with the budget team to close the gap without reducing essential services.
Josie Trevino, assistant finance director, credited Doyle with building a culture of trust and collaboration between the Finance Department and other City departments from the beginning of her tenure.
Doyle came to municipal government after a career in public education, transitioning from a school district into City finance leadership.
“In her first year, she met the challenge with confidence, emphasizing open communication, transparency, and proactive problem-solving. Her leadership has helped strengthen relationships across the organization while fostering a positive and supportive workplace culture within the Finance Department,” the City of Las Cruces said.
“The balance of technical skill and genuine care for people is what makes Lesley’s leadership unique,” Trevino said.
The GFOA has published Doyle’s recognition on its website, and her story will also be highlighted during the upcoming GFOA newsletter and highlighted at the annual GFOA conference.
Finance
Former top Treasury adviser warns that HMRC plans to track personal finances with AI
A former senior Treasury adviser to Gordon Brown has warned that HMRC is on the cusp of using artificial intelligence to track people’s and businesses income and expenditure without them knowing.
Dr Chris Wales, who was a member of Mr Brown’s Council of Economic Advisers for more than six years, has sounded the alarm while launching a chilling book on the conduct of the Spanish tax authority, Agencia Tributaria.
He is set to join former Labour Treasury minister Baroness Dawn Primarolo at an event next week flagging up how the Spanish model of dealing with tax evasion is about to arrive in the UK suggesting that the door is opening for a “surveillance state.”
In a preview of the future, Dr Wales has claimed that confidentiality in personal life – not just finances – “will simply go out of the window” and asks whether there are adequate safeguards in the UK to prevent HMRC from emulating its Spanish counterpart.
He said: “From 1 January, every single invoice will go through the tax agency in Spain. The Inspector can already obtain all your utility bills and will soon find out which clinic and pharmacy you use and what you buy there, which restaurants you eat at, where you purchase wine and groceries, what kind of car you have, how far you drive and where you park, what flights you take and which hotels you use. Information security? A thing of the past.”
He went on: “I am far from being a libertarian, but I see great danger in the direction in which tax authority powers are going, particularly because the process doesn’t seem to involve our active consent. There is little parliamentary debate about it. In Spain it is simply out of control. In the UK, let’s see.”
Highlighting the CONNECT AI program already used by HMRC in the UK, Dr Wales claimed that the UK is now close to following Spain’s lead.
He said: “HMRC has been using sophisticated information technology for years including an AI system called CONNECT which, as early as 2023, was said to contain more than 55 billion taxpayer-related data items.
“It will be much bigger today with these billions of pieces of information about taxpayers capable of being sorted quickly by AI.”
Dr Wales, who is now senior research adviser at International Centre for Tax and Development, added that HMRC also declines to say what algorithms it uses, under the pretext that if you publish them people will “game the system”, a claim that he suggests does not stand up to scrutiny.
“The system is understood to be used to target evasion. For tax authorities, everyone is a potential tax evader. This means that they believe they have a legitimate reason to collect data about all of us,” he said.
Finance
Boyle Heights warehouse fire: Where neighbors, victims can seek financial assistance
More than two weeks after a fire broke out inside the Lineage warehouse in Boyle Heights, many neighbors have received N95 masks and air purified while mobile health clinics are set up in their area.
But some neighbors said the massive fire that sent toxic fume into the air and created a horrendous stench of rotting food has cost them out of pocket.
Neighbors said they missed days of work while spending extra money on property cleanup. One woman said she spent hundreds of dollars on air purified before they became more widely distributed.
Lineage, the company that operates the burned warehouse, donated $2 million to the California Community Foundation (CCF) so the money can be distributed to the community. The organization said it’s split the money between different organizations.
At least 10 of them are listed as providing financial assistance.
The Boyle Heights Chamber of Commerce said it’s offering small business grants funded, in part, by the group, Inclusive Action for the City.
“We’re hoping that for brick and mortars: it would be up to $3,000. And then for our vendors, it would be up to $1,000,” Miriam Rodriguez with the Boyle Heights Chamber of Commerce said, adding the application is “very straightforward.” “It’s intentionally made that way so that there’s not a lot of requirements. We’re not asking for legal status. We’re not asking for pages of documentation.”
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