chief executive, Craig Meller is in full support of the Reserve Bank implementing macro-prudential policies to keep the surging property market in check.
"The challenge we've got as a country is we need low interest rate to stimulate growth in the country, and one of the side impacts of low interest rates is more and more money being invested in property, rather than stimulating broader growth in the economy," he told reporters at the Committee for Economic Development of Australia.
"Funding ways to moderate the investment in property whilst still keeping interest rates low to generate momentum elsewhere in the economy looks like good policy."
The Reserve Bank is set to front a Senate committee this Thursday to discuss the possibility of enforcing stricter lending rules on investors to help cool property prices – who are now making up almost half the flow of new approvals.
The Reserve Bank governor, Glenn Stevens
told the Melbourne Economic Forum at Melbourne University that the Bank was open to restrictions on home lending.
"I have certain scepticism about macro-prudential tools as a panacea, but I remain open to using them if it seems sensible to do so and that's the kind of thing we have in mind right now," he said.
It still remains to be seen what macro-prudential tools will be adopted. Chief Economist at MacroBusiness.com.au, Leith van Onselen thinks we are unlikely to go down the same path as New Zealand.
“At this stage it appears that the RBA
/APRA are unlikely to follow the Reserve Bank of New Zealand’s approach and implement loan-to-value ratio (LVR) limits. These are perceived as being too blunt and having a particularly detrimental impact on first home buyers, who struggle to raise the necessary 20% deposit. Instead, it looks as if the RBA
/APRA could raise interest rate buffers,” he said