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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General

Another batch of poor economic data has left the Reserve Bank Governor Glenn Stevens with little choice but to again hint at an easing bias, and reiterate concerns over Australia's hot housing market. He did this last week when he spoke in Brisbane and his comments on monetary policy remained consistent with the recent themes of communication from the RBA. Stevens’ comments suggest that the RBA retains a clear easing bias if needed, but remains reluctant to do so given the limits to what monetary policy can do.

On Sydney house prices, the Governor is “acutely concerned” and commented that some of what is happening is “crazy”. These are extremely unusual words for any central bank governor to use and suggest a very strong level of concern about the rate of house price growth, and the risks that could come with even easier monetary policy.

It appears that the Official Cash Rate is likely to remain at 2% for some time, although the risk remains to the downside, noting that it will be “quite some time” before the RBA thinks about interest rates going up.

Source: Rural Bank


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