Weekend Economist: A matter of prudence

Rising house prices have got the RBA's attention. With New Zealand rolling out macro-prudential policies, should Australia follow suit?

The minutes of the Reserve Bank board’s monetary policy meeting of September 2 have raised the level of concern that the bank is now signalling around Australia’s residential property boom. Specifically the board notes: “policy also needed to be cognisant of the risks to future growth that could accompany a large further build up in asset prices, particularly if that was associated with an increase in leverage;” and: “Credit growth for investor housing was running at around 10 per cent per annum. Housing prices were continuing to increase in the larger cities and members considered that the risks associated with this trend warranted ongoing close observation.”

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