QE: The next chapter in the RBA playbook

We don’t need lower interest rates to stimulate investment so if the RBA is dropping rates now it’s a pre-emptive move to head off serious problems with growth in our economy. Lower rates will absolutely lead to higher residential property prices and the RBA would be thinking same, so that means their concern over what is coming at us is GREATER than their concerns we are building a property bubble. To offset this, I expect more leaning on the oligarchs (NAB, ANZ, Westpac and CBA) and some prudential rules to limit credit growth, but rest assured prices have further to go. Asset growth in other areas will be a problem also – commercial and industrial property, equities paying reliable dividends and (for now) long dated Australian bonds will be popular. So don’t worry – inflation is alive and well! It is in assets not consumer goods. I expect we will see more interest rate cuts now but it won’t be enough – leading to the next chapter in the RBA playbook. QE Aussie style. Read the full report: (VIEW LINK)

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