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Economists split on RBA’s rate call
Economists are highly divided on whether the Reserve Bank of Australia (RBA) has been too aggressive with the recent rate cuts, suggests an industry survey.
Economists split on RBA’s rate call
Economists are highly divided on whether the Reserve Bank of Australia (RBA) has been too aggressive with the recent rate cuts, suggests an industry survey.
According to Finder, 42 per cent of economists believe the RBA should cut less, as the central bank moved the rates three times in a year.
However, 50 per cent of respondents believe the RBA needed to be aggressive following three years without changing the cash rate and supported three cuts in a year.
Graham Cooke, insights manager at Finder, said the RBA’s decisions will never please everybody.
“On the one hand, some experts say the cutting was ‘overzealous’ and is seeing house prices soar while most economic metrics have been stagnant.
“Others think the RBA hasn’t done enough to repair the economy in light of lagging employment and inflation figures.”
By reducing the cash rate three times, Finder noted house price growth across the nation has seen a strong growth.
Australia’s two largest cities, Sydney and Melbourne, have grown by 5.22 and 5.35 per cent, respectively.
Not far behind were Canberra, Hobart and Brisbane which are all growing by greater than 3 per cent.
“One thing is clear: three cuts have reignited the housing market and pumped up property prices across the country,” Mr Cooke said.
“With more cuts on the horizon, it remains to be seen whether cheaper credit and lower rates will be an elixir or a poison pill.”
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