Shane Oliver, Head of Investment Strategy and Chief Economist.
The following note looks at after the Australian household debt and east coast housing booms.
The key points are as follow:
- The RBA has left interest rates on hold for 21 months.
- A rate hike is now unlikely until 2020: as growth is likely to remain weaker than the RBA expects; wages growth and inflation are likely to remain low for longer; bank lending standards are tightening further, and; house prices in Sydney and Melbourne are falling with more downside ahead. In fact, raising rates at time of falling house prices could be dangerous.
- For investors: bank deposits will continue to offer poor returns; Australian bonds offer better returns relative to global bonds; and remain wary of the $A.