Sunday, 31 May 2020
Jakarta
--:--
Tokyo
--:--
Hongkong
--:--
New York
--:--
RBA Sees Risk of Property-Price Spike as House-Building Dwindles
Tuesday, 17 September 2019 09:03 WIB | FISCAL & MONETARY |RBA

Australia's central bank said there's potential for an upswing in home prices as dwelling construction weakens, while reiterating it's prepared to lower interest rates further.

In minutes of its Sept. 3 policy meeting released in Sydney Tuesday, the Reserve Bank also noted that "the upward trend in wages growth appeared to have stalled" and that forward-looking indicators suggested employment growth would moderate over the next six months. It kept the cash rate unchanged at 1% after back-to-back cuts in June and July.

Policy makers reaffirmed that they see an œextended period of low rates and will ease further œif needed to support sustainable economic growth and faster inflation. The RBA noted positive investment intentions for mining in the 12 months through June 2020, modestly lower plans for non-mining industries and a œparticularly weak outlook for construction.

œThere was likely to be further weakness in dwelling investment in the near term, the RBA said. œMembers recognized that this could sow the seeds of an upswing in the housing price cycle at some point, particularly given the lengthy stages in the construction of higher-density residential housing.

Since the two cuts and an easing of lending restrictions, property prices in Sydney and Melbourne have been resurgent. Policy makers are hoping this will generate a wealth effect that encourages consumers to resume spending, particularly as a government cash rebate is being transferred to households.

œHowever, the bank's liaison with retailers suggested that this had yet to lift spending noticeably, the minutes said. The bank noted that even if the cash œwas used to pay off debts, this would still bring forward the point at which households could increase their spending.

Australian household debt is at a record-high and this is being compounded by weak wages growth.

The minutes also showed members had a œdetailed discussion of the ways in which financial conditions abroad affect Australia. The board noted that Australia's floating exchange rate -- currently near its lowest in some years -- meant policy could be set according to domestic conditions.

At an international level, the RBA expects trade will remain weak for some time and noted that heightened geopolitical uncertainty -- the U.S.-China trade war, Brexit and Europe -- had contributed to lower growth and investment in many economies.

Australian firms didn't seem to have been affected by the weak trade environment as much as counterparts in other advanced economies, the minutes said, pointing out Australian companies are more geared to China's domestic demand and less integrated in global supply chains.

Still, the bank reiterated that œit was reasonable to expect that an extended period of low interest rates would be required, the minutes showed. œMembers would assess developments in both the international and domestic economies, including labor market conditions, and would ease monetary policy further if needed to support sustainable growth in the economy and the achievement of the inflation target over time.

The RBA targets inflation of 2-3% and has struggled to reach that target for almost five years.

Source : Bloomberg

RELATED NEWS
Powell Says The Fed is 'Days Away' from Making The First Loans in The Main Street Lending Facility...
Friday, 29 May 2020 22:56 WIB

Federal Reserve Chairman Jerome Powell said the central bank's long-awaited program to lend to small- and medium-sized businesses is about to get off the ground. The Main Street lending facility, whi...

RBA : Australia Economic Downturn To Be Less Severe Than Initially Feared...
Thursday, 28 May 2020 10:06 WIB

Australia™s central bank chief said on Thursday that better-than-feared health outcomes from the COVID-19 pandemic suggest the country™s economic downturn will likely not be as severe as earlier t...

RBA's Lowe: Australian financial system is resilient and is well placed to deal with COVID-19...
Thursday, 21 May 2020 09:53 WIB

Reserve Bank of Australia (RBA) Governor Philip Lowe is on the wires now, via Reuters, speaking on a panel at FINSIA's "The Regulators" Webinar. "Australian financial system is resilient and is well ...

Fed Officials Discuss How to Convince Markets That Interest Rates Will Stay Low For a Long Time...
Thursday, 21 May 2020 02:33 WIB

Federal Reserve officials in April discussed the next phase of interest rate policy ”convincing markets that rates will stay low for a long time ” but gave no sense than any changes were imminent....

Mnuchin Defends U.S. Fiscal Response to Pandemic, Seeks Payroll Loan Extension...
Wednesday, 20 May 2020 02:20 WIB

U.S. Treasury Secretary Steven Mnuchin on Tuesday defended the Trump administration™s fiscal response to the coronavirus pandemic and told senators he was willing to consider extending and modifying...

LATEST NEWS
Hong Kong stocks end week with more losses (Review)

Hong Kong stocks finished with more losses Friday as traders nervously await Donald Trump's news conference, in which he will set out the US response to China's plans to impose a security law on the financial hub. The Hang Seng Index fell 0.74...

Stocks Erase Early Losses to End Mixed as Trump Refrains From Tearing Up U.S.-China Trade Deal

Stocks reversed early losses to post a mixed finish Friday, capping a strong weekly and monthly performance, after President Donald Trump announced a series of measures aimed at punishing China over its treatment of Hong Kong but refrained from...

U.S. oil futures reverse course to finish higher, climb 88% for the month

U.S. oil futures reversed course to finish higher Friday, getting a boost as traders eye developments tied to Hong Kong related tensions between the U.S. and China, and as another drop in U.S. oil rigs suggested further domestic production...

POPULAR NEWS
Gold prices end lower on growing tensions between the U.S and China over Hong Kong
Thursday, 28 May 2020 01:18 WIB

Gold futures ended lower Wednesday, but of session lows as tensions between the U.S. and China worsened after Secretary of State Mike Pompeo...

Gold prices settle slightly higher Thursday
Friday, 29 May 2020 01:18 WIB

Gold prices notched a slight gain Thursday as investors focused on intensifying friction between the U.S. and China. Continued concerns about...

Hong Kong stocks hit by China-US stand-off (Review)
Friday, 29 May 2020 03:31 WIB

Hong Kong stocks sank Thursday as traders grow increasingly worried about the impact on the city's future from a US decision to revoke its...

Gold prices rise as Hong Kong dispute riles China-U.S. ties
Thursday, 28 May 2020 16:43 WIB

Gold prices on Thursday recovered after touching a two-week low the previous session, as the rift between Washington and Beijing over Hong Kong...