The Reserve Bank has as expected left interest rates on hold for October at 2.5 per cent, but certainly changed its stance a little on house price inflation and the Australian dollar.
The RBA’s growing concerns about a build-up of risk in the property sector again got a mention with Glenn Stevens commenting on a further pick-up in recent months in lending to investors in housing assets.
The RBA has recently been trying to talk down the Sydney and Melbourne markets to help take the sting out of them, and has even suggested using macro-prudential controls on certain mortgage lending.
The Australian dollar finally fell since the last board meeting, which the RBA would no doubt have been pleased about, although they still are far from content with its value.
“The exchange rate has declined recently, in large part reflecting the strengthening US dollar, but remains high by historical standards, particularly given the further declines in commodity prices in recent months,” the RBA said.
Putting the Reserve Bank’s comments into perspective, CommSec chief economist Craig James described them as a “softly, softly approach”.
“The Reserve Bank hasn’t upped the rhetoric on home lending, merely observing that investor housing lending has picked up,” he told the Sydney Morning Herald.
“And on the Australian dollar, the Reserve Bank is still unimpressed with recent declines, noting the currency is still high in relation to commodity prices.”