This is not the first time I’ve praised Bendigo and Adelaide Bank chief Mike Hirst. From the AFR:
“The global economy is just limping along and the G20 [leaders summit] is addressing that. Because we’re in that situation, however, a few countries have taken a new approach through quantitative easing, for example,” Mr Hirst said. “Given that fact, it is reasonable for regulators to look at new ways of countering the unintended consequences of that.” While Australia hasn’t had to resort to printing money, we still have record low interest rates, which has driven investor demand.
“I think it is well worth considering more targeted responses if you don’t want to impact the broader economy too heavily.”
Bendigo does not lend much to investors of inner-city property, and has lost market share in investment lending to its bigger rivals.
The AFR does us the favour of providing a juxtaposition for what Mr Hirst is not:
The Property Council of Australia responded to the AFR Weekend report by urging regulators not to “dampen record levels of activity in the residential market” in any response to the question of the risk weighting of mortgage. “The right policy levers are crucial to avoid perverse outcomes, such as greater difficulty for first-home buyers entering the market and a reduction in new supply caused by a drop-off in investment, and weighting measures should only be considered where there is systemic and likely risk”, said Nick Proud, executive director of the Property Council’s residential development council.
Thanks, parasites. Back to Mr Hirst:
In a “normal” situation, the Reserve Bank would raise interest rates when there is “strong price inflation,” he added. “But we’re clearly not in a situation where the blunt instrument of monetary policy being used against one sector of exuberance in the economy is warranted.”
But Mr Hirst said the measures may be prospective rather than reactive – meaning the regulators want to ensure the concentrated price rises in Sydney and Melbourne don’t turn into a much bigger problem.
Very good. They will indeed aim to stop not sink price rises, in order to hasten a falling dollar. Well done, Mr Hirst.
