Dr. Shane Oliver, the Head of investment Strategy and Chief Economist for AMP Capital, a major Australian fund, notes that the Reserve Bank of Australia's (RBA) next move on interest rates could be a cut instead of a hike if housing prices in key Australian cities continue to falter.
There is some risk the Reserve Bank might have to cut interest rates again... We are seeing home prices come off again in Sydney and Melbourne and obviously that will have a negative wealth effect.
If that gathers pace, and there is a risk there with the tightening of bank lending standards, then that might force the Reserve Bank's hand into actually cutting again, because the tightening in lending standards is a defacto monetary tightening.
- Dr. Shane Oliver
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