The Reserve Bank of Australia has decided to put rates on hold for another month. It is widely expected that rates will start to climb again in either October or November as monetary policy begins to tighten. Australia’s official rate of 3% is the highest in the OECD and whilst the country is doing better than most there are issues around housing supply and household spending that are yet to be addressed.
The shortage of housing in Australia is having a large effect on affordability. The combination of other factors like rising interest rates, increased levels of unemployment and underemployment, oil price increases and its flow on to essential items like groceries will keep everyone interested as we progress through 2010. There are some major policy decisions that need to be made by Government at all levels – will they be courageous enough to make them?