Another sign the RBA will act on housing

A speech by RBA deputy governor Philip Lowe adds to two previous signals that the bank is likely to act on the over-inflated housing market.

The search for yield and risky lending may be a natural consequence of persistently low interest rates, but that environment “can lead to the development of new financial vulnerabilities” if left unchecked, according to Reserve Bank of Australia (RBA) deputy governor Philip Lowe.

The combination of low volatility -- at least until recently -- high asset prices, compressed credit spreads and rising leverage leaves the financial system more vulnerable to surprises.


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