From Callam Pickering late yesterday:
The Reserve Bank of Australia wants to leave rates unchanged for some time but the only justification is a fear of a housing bubble. The RBA should follow in the footsteps of other central banks by introducing macroprudential policies, which will soften the housing market and allow it to ease rates, lower the dollar and support a stagnating recovery.
…Elevated house price growth isn’t an argument for tightening; it is instead an acknowledgment that monetary policy is too blunt an instrument to support an economy and also reign in asset prices.
House prices might soften without the introduction of macroprudential policies – I’ve made that argument before – but it provides flexibility and a useful insurance policy for a central bank. This is the path the Reserve Bank of New Zealand and Bank of England have undertaken.
Keep up the good work. The logic is irrefutable. Get on with it, RBA/APRA.