Via the AFR:
Economist Richard Holden from the University of NSW said it was a “good idea” for the government to press the RBA to thoroughly explain why it had undershot its 2-3 per cent inflation target because the bank had been “too slow” to cut interest rates in June and July.
“If you had nudged the RBA to explain undershooting the inflation target over the last three years, then the RBA may have cut interest rates sooner,” Professor Holden said.
“But when the RBA cuts rates to low levels, that has financial stability and asset bubble ramifications.”
“So APRA would need to do more of a job on macroprudential measures like on interest-only loans to give the RBA more wriggle room to cut rates without being as concerned on asset bubbles.”
Exactly. Sadly, the AFR campaigned for APRA to cut instead, on behalf of bank margins, and has been whining about asset bubbles ever since.
Worse, APRA chairman Wayne Byers clearly should have been sacked following that regulator’s extraordinary fail exposed in the Hayne Royal Commission. That he was reappointed against the public interest, the wishes of independent voices in parliament and, if I may be so bold, Commissioner Hayne himself, who recently made disparaging remarks about the regulator, has embedded corruption at the very heart of any macroprudential push today.
APRA chairman Wayne Byers is now personally indebted to a Government that kept him on even as it clearly aims to re-inflate the property bubble.
He should be sacked and macroprudential be tightened immediately. Further RBA rate cuts should be directed toward a much lower currency, not higher house prices.
