The door remains ajar for the RBA to further ease policy
The door remains ajar for the RBA to further ease policy. Today's core reading fits with the narrative from the RBA seen over the past year. That is, inflation is likely to remain within their target over the medium-term with soft labour market conditions helping to offset a rise in tradable inflation stemming from the lower AUD. With inflation now in the centre of their target band, there is now room for the RBA to ease policy further should risks to the global growth outlook continue to materialise. So is the RBA too focused on housing investor activity in Sydney and Melbourne? Slightly, but from a financial stability perspective, I can understand why they're concerned about recent developments in Sydney and Melbourne. Higher risk capital ratings, rather than other macroprudential policies implemented elsewhere in the world, seems the most likely step that APRA will take, in my mind at least.