The banks are clearly worried about low inflation and, perhaps even more so, low interest rates, from NAB yesterday, via Fairfax::
While lowering interest rates have made the central bank uneasy about the impact it is having of rising asset prices, falling rents are actually weighing on inflation – which is likely to compel the RBA to cut rates.
This is a self-defeating cycle identified by NAB economists in a new note titled, “Housing: the RBA’s other problem”.
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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.
