Today’s RBA meeting might should begin with a minute’s silence for the death of business lending. From the AFR:
…new analysis of official figures from UBS shows almost all of the net credit growth since 2012 has flowed into property, as opposed to new productive plant or equipment.
The research by banking analyst Jonathan Mott found that of the total increase in credit since mid-2012, $60.6 billion had financed owner-occupied housing, $45.8 billion had financed residential investment properties, and $10 billion had gone into commercial property.
Non-property business lending rose by just $3.2 billion…
This is the the blasted field left behind by a central bank fighting the last war. It has failed to understand Dutch Disease. It is has failed to address the dollar. It has failed to understand the Chinese and Australian structural adjustments. It has failed to make a judgement about the the quality of growth, opting only for a short-term can-kick of quantity.
As such, the RBA has created a very large headache for itself and everyone else with terrible business lending, a renewed housing bubble, fading confidence, no tradables momentum, and a hugely over-valued currency.
Take heed RBA, your next rate cuts need to get the dollar down, not send housing further up.
Macropudentual now.
