Reserve Bank of Australia
Headlines via Reuters
- board continues to discuss merits of further monetary stimulus
- board balancing risks of further cuts vs costs of very low rates
- would see "stronger case" for easing if unemployment trends higher, inflation stays low
- recent inflation, jobs data show things moving in right direction, if gradually
- says rates already very low, policy has long and variable lags
- further rate cuts would have effect on A$, boost demand for exports
- says rate cut would help households adjust to high debt levels
- but have concerns about effect of very low rates on resource allocation
- risk low rates could encourage borrowing when home prices already rising
- aware of risk of too much borrowing driving excessive asset valuations
- will continue to watch borrowing, in particular, very carefully
- bushfires to cut GDP growth by around 0.2 pct points across this quarter and last
- GDP growth for 2020 as a whole will be largely unaffected by bushfires
- too early to tell what overall impact of coronavirus will be, watching closely
- low rates make it easier for public, business sectors to contemplate long term investments
full text is here: The Year Ahead
OK, so I bolded probably the important bit - what the watch ahead (but its improving for now). And, looks like from the 'long lags' but Lowe is happy watching and waiting.
Says further cuts would help but worries about 'resource allocation' i.e. e house prices rising further. The RBA (via APRA, tightened macroprudential rules about 3 years ago which seemed to out a lid on price rises. But … as house prices fell so did the construction sector. But of a conundrum for the RBA and Lowe. But he gets big dollars for trying to figure this stuff out. Get on with it.
