RBA unlikely to cut for fear of overinflating property: Bloxham

With confidence lifting over the past few months, housing prices rising strongly, signs of an upswing in housing construction and other positive indicators, HSBC chief economist (Australia and New Zealand) Paul Bloxham, warns that the RBA is unlikely to cut again.

In his latest HSBC Economics report, Bloxham said that we are unlikely to see any more rate cuts from the RBA "for fear of overinflating the housing market".

"Further signs of a housing upswing and the recent lift in confidence mean that we continue to expect that the easing phase of the RBA's interest rate cycle is done, despite the more elevated AUD," he noted, referring to the Australian Dollar as the RBA's 'bugbear'.

"Low interest rates are clearly lifting the housing market, with housing prices rising by around 6% over the past year and housing price growth accelerating in the past quarter," the report explains.

With improving local and global economic conditions, he said that ultimately he expects the Reserve Bank to stay on hold when the board meets on Friday.

Jennifer Duke

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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