Reserve Bank of Australia governor Lowe speaking, topic is The Housing Market and the Economy
Headlines via Reuters
- Says has flexibility to adjust monetary policy in either direction
- plausible scenarios where rates go up and where rates go down
- at moment, the probabilities appear "reasonably evenly balanced"
- labour market is key issue, recent data have been encouraging
- other economic indicators "paint a softer picture"
- GDP growth in second half of 2018 was clearly less than in first half
- growing tension between strong labour market data and softer GDP data
- adjustment in housing market is manageable for overall economy
- less than 5% of indebted owner-occupier households have negative equity
- liaison showed some lenders became more cautious last year
- credit conditions tightened more than was probably required
- important that banks are prepared to take credit risk
- tightening in credit supply contributed to slowdown in credit growth
- but main story is one of reduced demand for credit, rather than reduced supply.
- wealth effects influencing consumption, but mainly through income expectations
- this means developments in labour market particularly important
Lowe, as usual, sounds comfortable. He as good as says that apart from the labour market other indicators are soft. He also gives us a guide to what to watch for RBA thinking 'labour market is key issue'. Keep watching the monthly jobs data lottery and wage indicators then folks.
His comments on negative equity … less than 5% of indebted owner-occupier households have negative equity. Well, OK then. Less than 5% is better than more than 5% but 5% is a concern regardless, even if the RBA does not think so. That'll weigh on consumption at the margin indeed.
AUD doing little on the inout from Lowe.
Stay tuned for the Q&A ladies and gentlemen. I'll post separately.
Here is the full text: The Housing Market and the Economy
