Vital Signs: It’ s not the Reserve Bank’ s job to worry about housing prices – MENAFN.COM

SectorFinancial Services
CountryMiddle east

(MENAFN – The Conversation) Once again folks are pointing to the potential danger of Australia’s low interest rates. This week a poll of so-called ‘market economists’ by ratings agency Fitch had only 12% of respondents in favour of the Reserve Bank of Australia’s current stance, with 68% saying its monetary policy was too loose – that is, interest rates are too low. In Australia there is understandable concern about housing prices.

Our already serious housing affordability problem seems to have been made worse by a heady combination of low interest rates, light at the end of the COVID-19 tunnel and a large dash of irrational exuberance. But, as I’ve said before, the housing market should not be the focus of the Reserve Bank when setting monetary policy. The central bank must focus on its inflation target and maintaining credibility. Comments in recent weeks by the bank’s deputy governor, Guy Debelle, and the bank’s actions over the past two years more...