Australia’s central bank would favour a multi-pronged stimulus if economic conditions unexpectedly deteriorated to the point where it had to head into uncharted territory... Rental markets continue to move at different speeds...
Bloomberg -- Australia’s central bank has studied the examples of unorthodox policy conducted by its peers, and would favour a multi-pronged stimulus if economic conditions unexpectedly deteriorated to the point where it had to head into uncharted territory.
The Reserve Bank of Australia (RBA) currently still has room for traditional interest-rate cuts, with its benchmark at 1.75%.
However, economists anticipate another reduction as soon as next month, and Deputy Governor Philip Lowe -- who will take the RBA’s helm in September -- has indicated that lowering the rate on its own would lose effectiveness as it approaches 1%.
That explains the studies conducted by RBA staff. One advantage Australia has is learning from the experience of counterparts in Japan, Europe and the U.S. over the past several years in deploying monetary stimulus beyond rate cuts.
“As you would expect, we have considered what lessons can be drawn for Australia by looking at the experience of other central banks that have adopted various unconventional measures,” RBA Assistant Governor Christopher Kent, who is responsible for economic analysis and research, said in an interview.
He said the likelihood of the bank having to consider using such measures is “very remote.”
Rental markets continue to move at different speeds
Australia’s rental market remains a mixed one, with new figures showing a wide variance in conditions recorded across the country’s capital cities.
Released this week, the June quarter Domain Group Rental Report has revealed rents have hit record highs in some markets, while others are continuing to see rental rates in decline.
For the markets that have seen an increase in rents, Domain Group senior economist Andrew Wilson said they have been driven by the fact demand for rental accommodation is still outstripping supply.
“Despite easing conditions for tenants in many capital cities, the underlying demand for rental accommodation still remains ahead of supply,” Dr Wilson said.
“Fewer investors have intensified property shortages, while low numbers of first home buyers and migration have fuelled a rising demand for rentals,” he said.
(Your Investment Property)