Unprecedented fiscal stimulus and monetary accommodation is no panacea for these deficiencies. As this realisation has dawned, market economists have rushed to downgrade their 2022 and 2023 economic growth forecasts for the US, UK, Eurozone, Japan and China. But not for Australia – well, not yet.
Any overconfidence in their ability to simultaneously bring inflation to heel risks compounding their first error with a second by weakening growth too much. This could cause a recession or worse, stagflation. Our historical good fortune was that we patched over these challenges with population growth and bouts of unexpected resource price strength. We seem to be hoping in coming years to again be the “lucky country”.
And now a reckoning has come. Like other central banks, the RBA will seek to raise interest rates to tame inflation, but it is flying blind in terms of the impact its action will have in the current economic environment given its last experience with a tightening cycle was a decade ago.This suggests that a gradualist approach is required, with less aggressive tightening than many economists and financial markets now expect.
Source: Loan Digest (loandigest.net)
Is this aimed at people who’ve never heard of property before?
They deserve it
Trivia question. Which department made sure new borrowers no longer have to show they can repay at 7% plus? Which portfolio minister was responsible for this department?
Most people would rather have their own place than be paying off someone else’s. They will make it work until it turns around.
Investors mainly in the last two years will feel the pinch, for home owners it really doesn’t make a difference most are not buying to sell in a hurry.
A bit slow for a finance newspaper...stick to what you know...FR...being rough toilet paper
As long as they can make their repayments, most ppl won’t be comcerned. They’ll wait it out. It’s forced selling you have to be concerned about. Can’t see that happening with low unemployment
The RBA governor said house prices in not their mandate.
yeah, get on with it..
Could also bring prices to normal wages level. Ones who fall into neg equity will at least have a house over their head so all is good. Or is the gov supposed to guarantee ridiculous house prices?
it would be good for millennials It would make house more affordable Freeze migration to cut demands Let giant developers go bankrupt as they r hoarding unsold units while building more glass towers
It 'could' also release cost of housing pressures and restore our perspective on the real cost of money...
In negative equity in the US ... you just hand the keys to the bank, thats all they can get. In AUS, they can take the house, sure, but then pursue you for any other thing of value you own
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