In the comments this morning, from Bud, in response to McCrann’s saying an RBA rate cut next Tuesday is “almost certain”
- Not credible!
Giving the housing market in Australia. What do they plan? Putting more heat under real estate prices?
From the Australian Financial Review (Alan Mitchell) yesterday, agreement …
The RBA … should want to keep rates on hold, at least for now – and not just because the underlying measures of inflation are slightly above forecast. The more serious problem is that a rate cut now might spark another surge in real estate prices.
And …
- The key to the very low December inflation number is petrol, but the fall in global oil prices has a special feature that changes the usual monetary policy calculations
- It is a predominately a supply-side event
- Oil is not the only plus for growth
- The Australian dollar has fallen about 15 per cent against the US dollar and 10 per cent against the currencies of all our major trading partners since early September … a plus for investment and jobs
- It also will add to import prices and inflation
- Petrol prices and the dollar are doing part of the RBA’s job for it … without inflaming the property market
From here (but its gated): RBA should avoid rate cut trap to prevent real estate risk
–
ps. I’m with Mitchell, not McCrann
