THE Reserve Bank is facing a major litmus test: How to keep rates low for several more years without creating a housing price bubble and blowing out household budgets.
This as more experts agree that the conditions may not be right, even past next year, to raise interest rates without negatively impacting consumption, household balance sheets and the economy.
After the Reserve Bank board’s October meeting, RBA Governor Philip Lowe said the bank would leave the cash rate target unchanged at a record low 1.5 per cent – a level that was “continuing to support the Australian economy”.
Fear of creating a housing price bubble is real in a low rates scenario. Picture: AAP IMAGE/Troy Snook.
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