UPDATE 2-Australian bank c.bank sticks to low rates even as housing market heats up


* RBA keeps rates at 0.1%, buying bonds at AU $ 4 billion per week

* The economy is expected to rebound in the fourth quarter after the contraction of the third quarter

* Moderate wages, inflation means no rate hike before 2024

* Regulators look at mortgage loan growth, house prices (adds new quote on housing)

SYDNEY, Oct.5 (Reuters) – Australia’s central bank on Tuesday kept interest rates at an all-time high for an 11th consecutive month and appeared poised to hold them there for a few years even as pressure mounts for a hike to cool a hot home. Marlet.

The Reserve Bank of Australia (RBA) concluded its October policy meeting with spot rates at 0.1% and its bond purchase program unchanged at A $ 4 billion (A $ 2.92 billion). dollars) per week.

This was an expected result by the 36 analysts polled by Reuters, as the bank has long argued that no increase was likely until 2024 given weak wages and inflation.

The need for a continued stimulus was underscored by the coronavirus closures in Sydney, Melbourne and Canberra, which were sure to cause a painful contraction in economic growth in the September quarter.

The central bank is counting on a rapid recovery now that vaccination rates are high enough that restrictions will soon be relaxed, with nearly 80% of the adult population having received at least one dose.

New South Wales is expected to ease stay-at-home rules from next week, Victoria to follow later in October.

“As vaccination rates rise further and restrictions are relaxed, the economy is expected to rebound,” RBA Governor Philip Lowe said in a statement.

He said the economy is expected to grow again in the fourth quarter and recover all the ground lost to Delta’s lockdowns by the second half of next year.

“The Bank’s trade link and job vacancy data suggest that many companies are looking to hire workers ahead of the scheduled reopening in October and November,” Lowe added.

Yet the prospect of rates remaining so low for years to come has also inflated a house price bubble, which has raised a lot of concerns about affordability and leverage.

The RBA rejected calls to use rates to dampen the market, arguing that it would only hurt the economy at large and that macroprudential rules were the best tool.

Regulators announced last week that home loan proposals would be released within the next two months, and analysts expect the focus to be on income-to-debt ratios and loan valuations.

Analysts suspect they could limit the share of bank loans when the debt is at least six times the borrower’s income and increase the minimum interest rate used to assess loan viability.

“The housing market has been firmly on the radar as house price growth has remained very strong and new loans have shifted from first-time buyers to investors,” said Kristina Clifton, senior economist at CBA.

“We expect macroprudential policy to be reintroduced at the end of this year / early next year,” she added. “It is likely to be calm on the monetary policy front until February, when we expect the RBA to further reduce its bond purchases.”

$ 1 = A $ 1.3717 Wayne Cole report; Editing by Ana Nicolaci da Costa


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