RBA signals cautious approach ahead in 2016: HIA
GUEST OBSERVER
The board of the Reserve Bank of Australia today decided to keep the Official Cash Rate at 2%t - there is no surprise there.
The RBA has signalled that the cash rate will remain on hold for the foreseeable future.
The Bank has also signalled that if there is to be any change in 2016 it will be a further reduction.
That is the appropriate message for now given the uncertainty around future new home construction activity in 2016/17 and beyond.
Higher variable mortgage rates and a broader reach for investor credit rationing than required is hitting at the very time when the new residential construction cycle is at or close to a peak. That is a risk for the broader Australian economy.
Harley Dale is chief economist, HIA and can be contacted here.
