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RBA passes the buck on cooling house prices


house price tag1Australia's housing market is getting out of control.

Economists have seized on language used by Reserve Bank of Australia (RBA) governor Philip Lowe in the latest Statement on Monetary Policy, released yesterday.

The RBA chose to leave the official cash rate untouched at 1.50%.

Lowe noted that supervisory measures by regulators had "contributed to some strengthening of lending standards". While the phrasing may seem innocuous, economists have argued it marks a sharp shift in tone from last month’s statement when Lowe definitively argued that regulator oversight had "strengthened lending standards", The Australian reported.

"It reads as an acknowledgement that the current supervisory regime is doing something to improve lending standards, but not enough," JP Morgan chief economist Sally Auld said.

The RBA’s statement, signalling rates were likely to remain untouched for the foreseeable future, puts pressure on the banking regulator, APRA, to curb rapid house price growth.

"This opens the door to something more on the macro-prudential front at some point, although the timing and nature of any change are unclear," Auld said.

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