Via Damien Boey at Credit Suisse:
In terms of the sources of downgrades, the Bank has slightly lowered its outlook for consumption and cut its forecast for residential investment. But it still expects business and public capex to do the heavy lifting.
Some other interesting comments from the SoMP include:
- The RBA’s view that offshore funding is driving domestic bank bill swap rates higher.
- The Bank’s concession that funding costs are now starting to feed through to higher mortgage rates. But equally, the Bank believes that competition is likely to keep a lid on out-of-cycle hikes, and officials still point to mortgage rates being low in recorded history.
- The Bank’s claim that housing demand is the problem more so than credit supply.
