Here’s Kouk’s tweet:
I rang Kouk to see how he reached this conclusion and his argument is basically that if you have this in the minutes:
Members noted that conditions in the housing market continued to strengthen. Nationally, dwelling prices were above their late 2010 peak, with prices over the three months to October increasing significantly in Sydney. Housing turnover and loan approvals had picked up noticeably. Improved conditions in the established housing market were providing an impetus to dwelling investment, with residential building approvals increasing over the year. Approvals increased notably in September, driven by a pick-up in high-density approvals, which tend to be quite volatile from one month to the next. In discussion, members observed that developments in the established housing market and the increase in new dwelling activity seen to date were among the expected effects of the low level of interest rates.
But you also have this in the minutes:
The Board’s judgement was that, given the substantial degree of policy stimulus that had been imparted, it was prudent to hold the cash rate steady while continuing to gauge the effects, but not to close off the possibility of reducing it further should that be appropriate to support sustainable growth in economic activity, consistent with the inflation target. The Board would continue to examine the data over the months ahead to assess whether monetary policy remained appropriate.
That is, both rising house prices and threats to cut rates further, then it’s not a bold leap of logic to get to macroprudential policy, in a sort of second derivative sense.
As I’ve been pointing for some time, the logic is irresistible but I’m not sure I see anything new here.
