In mid-June, RBA Governor Phil Lowe stated that the Council of Financial Regulators (CFR) – i.e. RBA, Treasury, APRA and ASIC – are actively examining macroprudential tools to curb the mortgage/property market in the event that credit accelerates, and that these tools would come into effect before the RBA considers lifting interest rates.
In this month’s Monetary Policy Decision, Phil Lowe also stated that the cash rate will not be lifted “until inflation is sustainably within the 2 to 3 per cent range”. Lowe elaborated that “it is not enough for inflation to be forecast in this range”, rather “we want to see results before we change interest rates”.
Our prediction, as outlined in this month’s member’s report, is that Phil Lowe will use his position as chair of the CFR to implement some form of macroprudential restrictions before the end of the year, the impact of which will dampen mortgage/property price growth heading into 2022.
