RBA Minutes Add Little

The latest minutes from the RBA tell us very little more than we already knew about the decision to keep the cash rate steady. They did continue to stress the benefit of rate cuts to households overall, because borrowers are more leveraged than savers (as discussed in their recent outing). We think they should be … Continue reading “RBA Minutes Add Little”

UK Bank Rate Unchanged in September 2016

The UK Bank Rate was held at 0.25%, government bond purchases at £435bn and corporate bond purchases at up to £10bn. Inflation remains well below target and business investment weak. The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target and in a way that helps to sustain … Continue reading “UK Bank Rate Unchanged in September 2016”

Household Cash Flows and Monetary Policy

The RBA released the September 2016 edition of the Bulletin today. The article “The Household Cash Flow Channel of Monetary Policy by Helen Hughson, Gianni La Cava, Paul Ryan and Penelope Smith is interesting, but possibly flawed. It looks at the impact of households when the cash policy rate is changed. Lower interest rates can … Continue reading “Household Cash Flows and Monetary Policy”

Economy grows 0.5 per cent in June Quarter

Australia’s economic growth slowed in the June quarter. Data released by the Australian Bureau of Statistics (ABS) today show that Gross Domestic Product (GDP) grew 0.5 per cent in seasonally adjusted terms in the June quarter 2016, down on the growth of 1.0 per cent the economy experienced in the March quarter. GDP grew 3.3 … Continue reading “Economy grows 0.5 per cent in June Quarter”

Where to for the housing market in Spring?

A nice summary piece from CoreLogic’s blog. The housing market appears to be responding to a number of factors which have spurred further growth in home values.  Official interest rates are at historic low levels which has encouraged borrowing for housing and driven housing debt to record-high levels.  The low interest rate setting is also … Continue reading “Where to for the housing market in Spring?”

The legacy of Glenn Stevens in three lessons

From The Conversation. On September 18 2016, Glenn Stevens will end his ten-year mandate as governor of the Reserve Bank of Australia (RBA). His experience in the top job provides a wealth of lessons for the next generation of policymakers; that’s arguably his most important legacy. A graduate from the University of Sydney and the … Continue reading “The legacy of Glenn Stevens in three lessons”

Rate Cut Reactions

From The Conversation. The Reserve Bank of Australia has lowered the cash rate to 1.5% in an effort to stimulate growth, boost inflation and encourage a fall in the Australian dollar. The cut of 25 basis points from 1.75% is the last decision from outgoing RBA Governor Glenn Stevens. In a statement on the rate … Continue reading “Rate Cut Reactions”

Canadian Regulators Ups The Ante On Residential Mortgage Lending

According to Moody’s last Thursday, Canada’s Office of the Superintendent of Financial Institutions (OSFI) notified the country’s regulated mortgage lenders that it will intensify its supervisory oversight of their residential mortgage underwriting practices. In the past 10 years home prices in Canada have lifted more than in Australia, although the debt to disposable income ratio … Continue reading “Canadian Regulators Ups The Ante On Residential Mortgage Lending”

Australia could be about to lose its AAA rating, and here’s why

From The Conversation. Australia’s AAA credit rating was under pressure even before the election and is now looking decidedly shaky. Ratings agency Standard & Poors has moved Australia’s rating outlook from “stable” to “negative”, due to debt and a poor chance of budget repair. This follows warnings from the other major credit rating agencies – … Continue reading “Australia could be about to lose its AAA rating, and here’s why”