The RBA shouldn't ignore the housing market's headwinds

The Reserve Bank's reluctance to tackle the risks posed by the housing sector clashes with its mandate to promote financial stability, especially given the implications of a bust for banks and credit markets.

Increasingly lost among the monthly debate on interest rates is the Reserve Bank of Australia’s other mandate: to promote financial stability. Given the number of headwinds facing the Australian housing market, financial stability deserves even more attention than that allocated to monthly cash rate movements.

Last night in a speech at the University of Adelaide, the RBA’s head of financial stability Luci Ellis walked us through a range of issues related to financial stability since the onset of the global financial crisis.

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