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3 Mar 2015
Australia housing market spoils RBA’s rate cut plans – Rabobank
FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, explains that the strong housing market led RBA to keep rates on hold in today’s meeting, and views that any moderation in activity in the same could push the Australian central bank to cut rates again this year.
Key Quotes
“The RBA may have decided not to cut interest rates any further this morning but the door to further policy accommodation has clearly been left open. Governor Stevens stated that “further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target”.”
“He also indicated that the strength of the housing market may have been the major factor behind today’s steady policy decision.”
“Overnight news of a far greater than expected 7.9% m/m rise in building approvals raises the chances of an increase in housing supply while the higher rate of unemployment could simultaneously cool demand.”
“RP Data reported that the average rate of gains in house prices across the country did slow in February and cites factors such as low rental yields and political uncertainty along with higher unemployment and declining affordability as additional factors which could put the brakes on the housing market and the related growth in household debt levels this year.”
“It will clearly that some time before the cumulative impact of these factors can be measured, but any signs of a moderation of activity in the housing market would underpin our view that the RBA is likely to cut interest rates again this year.”
Key Quotes
“The RBA may have decided not to cut interest rates any further this morning but the door to further policy accommodation has clearly been left open. Governor Stevens stated that “further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target”.”
“He also indicated that the strength of the housing market may have been the major factor behind today’s steady policy decision.”
“Overnight news of a far greater than expected 7.9% m/m rise in building approvals raises the chances of an increase in housing supply while the higher rate of unemployment could simultaneously cool demand.”
“RP Data reported that the average rate of gains in house prices across the country did slow in February and cites factors such as low rental yields and political uncertainty along with higher unemployment and declining affordability as additional factors which could put the brakes on the housing market and the related growth in household debt levels this year.”
“It will clearly that some time before the cumulative impact of these factors can be measured, but any signs of a moderation of activity in the housing market would underpin our view that the RBA is likely to cut interest rates again this year.”