RBA should turn to meetings every six weeks: Angus Raine
Raine & Horne chief, Angus Raine, has said that the Reserve Bank of Australia should take a lead from Europe and meet every six weeks rather than once a month.
With a recent meeting of the Governing Council of the European Central Bank committing to the change, Raine said that it would be sensible for the Reserve Bank to follow their lead and move to this new six week cycle. The European Central Bank will be taking this step from January 2015, although their non-monetary policies will continue as usual.
Raine said that in the past, RBA decisions take a few months to wash through the system and to affect consumer confidence, business activity and the real estate market, however they continue to meet and make decisions on a monthly basis.
“Moreover, we've seen how the lead up to an RBA board meeting can be front page news and the hype and speculation leaves buyers and sellers holding their breath in the weeks before and after the outcome is announced, which stymies real estate activity,” said Raine.
“To be fair, the impact of the monthly meetings is not as emphatic in a bull run like we've enjoyed over the past two years but I'm more concerned about the effect when the RBA starts tightening monetary policy with a series of hikes, which is expected to begin later this year or early next.”
He noted that even if changes cause mortgage repayments to increase by as little as $50, it will take home owners a fortnight to calculate what they can afford.
“Longer intervals between meetings could give the RBA more time for its decisions to work their magic and minimise the impact that the meetings have on business and investment activity,” he said.
