Barclays: Macroprudential looms in 2014

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Via Forexlive:

From Barclays economist Kieran Davies, on the October monetary policy board meeting minutes (released earlier today):

  • The RBA board appears to have discussed macroprudential tools at the meeting
  • No disclosure in the minutes, though
  • Davies is of the opinion that the RBA may introduce a new ‘macro-prudential’ measure before the end of 2014
  • Davies thinks the bank may implement a capital charge for investor home loans
  • For example, Davies estimates that a doubling in the risk weighting for investor home loan would equate to half a 25bp rate rise for the housing market
  • Such a tool would be a “clear risk to the timing of our forecast that modest rate hikes commence in Q1 next year”

It doesn’t say a whole lot for the independence of Australian market economists that are nearly all ignoring this reality. MP is coming, rate hikes are not.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.