Today the Reserve Bank released the minutes of the last Monetary Policy meeting of the RBA Board.
Not very exciting – things went up and things went down and on balance they decided they did not need to yank on the household debt lever this month by cutting the target rate.
Key comment 1
“…Conditions in the established housing market had eased somewhat since September 2015, in part reflecting the effect of supervisory measures implemented in that year. In addition, after rising for some time, the growth in aggregate housing credit had stabilised over the past six months or so, with a significant easing in growth in lending to investors….”
Key comment 2
“..Members noted that continued low inflation would provide scope to ease monetary policy further, should that be appropriate to lend support to demand…”
“…Our Household Debt/House Price bubble was getting a bit frisky and expanding too fast (even for us ponzi lovers) so we threw a bit of “supervisory” cold water on investors – but don’t think we are going to stand back and let our precious bubble get soggy in an election year as we have plenty of “scope” to cut rates if we think our bubble needs a bit of fresh cheap household debt to keep it inflated..”
If you are holding your breath waiting for the housing market to pop – make sure it is a big one as the RBA and APRA are clearly determined to protect their bubble with juicier “bait rates” if necessary.
And politicians of all parties and most economic commentators will applaud them when it happens because down in sleepy Australia the idea of managing the money supply without pumping up household debt to the stratosphere is probably a decade away from being discussed in polite society.