Why the RBA's macroprudential move will fail

The great flaw in the macroprudential view of the world is that it confuses short-term speculative demand with prudent, long-term property investment.

The Reserve Bank of Australia’s Financial Stability Review spells out clearly the case against macroprudential regulation. Indeed it’s apparent that the call to increase the regulatory burden is a highly emotional one. Vindictive at its core, it stems from the growing frustration of officials, and others, who do not understand the current housing market dynamic or the economy more broadly.

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