APRA must maintain ‘close vigilance’ of lending standards, says OECD...‘100% of experts’ say cash rate to hold
APRA must maintain ‘close vigilance’ of lending standards, says OECD
Australia’s housing boom could disrupt the real economy and so lending standards should be tightened even further, a new report on Australia’s housing boom by the Operation for Economic Cooperation and Development has warned. The report, an update on economic developments in the OECD member states, also reflects on the potentially ‘dramatic and destabilising’ effects of house prices beginning to fall.
The OECD did however recognise recent changes in the housing market: “with receding risks from the housing boom, there is leeway for further monetary policy easing in the event of a new downturn. Close vigilance on housing-market developments is still required… house-price and mortgage-credit growth are slowing, assisted by macro-prudential tightening.”
With the RBA’s June board meeting coming tomorrow, the OECD suggested the cash rate could be lowered even further: “room for further rate cuts remains in the event of below-par growth. Fiscal policy needs to let the automatic stabilisers operate while keeping a medium-term objective of reducing the public-debt burden.”
‘100% of experts’ say cash rate to hold
A survey of 31 economists and other experts found all 31 expected rates to remain at 1.75% after Tuesday’s RBA board meeting. Over two-thirds (68%) of the panel, assembled by comparison Finder.com.au, predict the RBA will cut rates again this year.
AMP’s chief economist Shane Oliver told the survey that: "while I expect the RBA to cut the cash rate again this year, not enough will have happened to bring on another move by the June meeting." The RBA cut rates in May to a historic low of 1.75%, citing a lower outlook for inflation and strengthening lending standards in the housing market reducing the risk from interest rate cuts
Dr Andrew Wilson, economist at Domain Group, predicted the RBA would" take a wait and see approach after last month’s cut with data remaining mixed. Inflation critical but bias remains solidly for another cut this year although a near-term rise in US rates may stay the RBA hand." The RBA will also need to consider figures released at the start of June, which showed the Australian economy was growing at 1.1%, the fastest rate in three and a half years.
Of those panel members who did predict a rate rise this year, 45% (14/31 overall) expected the rise to come in August.
Australia’s housing boom could disrupt the real economy and so lending standards should be tightened even further, a new report on Australia’s housing boom by the Operation for Economic Cooperation and Development has warned. The report, an update on economic developments in the OECD member states, also reflects on the potentially ‘dramatic and destabilising’ effects of house prices beginning to fall.
The OECD did however recognise recent changes in the housing market: “with receding risks from the housing boom, there is leeway for further monetary policy easing in the event of a new downturn. Close vigilance on housing-market developments is still required… house-price and mortgage-credit growth are slowing, assisted by macro-prudential tightening.”
With the RBA’s June board meeting coming tomorrow, the OECD suggested the cash rate could be lowered even further: “room for further rate cuts remains in the event of below-par growth. Fiscal policy needs to let the automatic stabilisers operate while keeping a medium-term objective of reducing the public-debt burden.”
‘100% of experts’ say cash rate to hold
A survey of 31 economists and other experts found all 31 expected rates to remain at 1.75% after Tuesday’s RBA board meeting. Over two-thirds (68%) of the panel, assembled by comparison Finder.com.au, predict the RBA will cut rates again this year.
AMP’s chief economist Shane Oliver told the survey that: "while I expect the RBA to cut the cash rate again this year, not enough will have happened to bring on another move by the June meeting." The RBA cut rates in May to a historic low of 1.75%, citing a lower outlook for inflation and strengthening lending standards in the housing market reducing the risk from interest rate cuts
Dr Andrew Wilson, economist at Domain Group, predicted the RBA would" take a wait and see approach after last month’s cut with data remaining mixed. Inflation critical but bias remains solidly for another cut this year although a near-term rise in US rates may stay the RBA hand." The RBA will also need to consider figures released at the start of June, which showed the Australian economy was growing at 1.1%, the fastest rate in three and a half years.
Of those panel members who did predict a rate rise this year, 45% (14/31 overall) expected the rise to come in August.
