The Reserve Bank is leaving the door well and truly open to another interest rate cut due to fears house prices in some Australian cities will fall without further assistance.
Indicative of the mixed national economy, the RBA’s minutes from its last meeting show the bank is concerned about runaway prices in Sydney but falling prices in other cities.
House prices in Sydney have climbed more than 14 per cent over the last year, while in Melbourne they have risen by 8.4 per cent.
It’s a different story in Perth where prices have fallen since the end of the mining boom, and other capitals where they have barely kept up with the rate of inflation.
Immediately after the RBA cut rates again to a record low to 2 per cent the Australian dollar rose after the bank failed to give a clear signal on its future intentions.
The minutes reveal the bank believes another rate is possible.