The RBA is task with looking after the whole economy. Housing is...

  1. 7,178 Posts.
    The RBA is task with looking after the whole economy. Housing is but one of many components, they cannot adjust rates for just one component or one market within the broader economy as there could be negative impacts in other parts.

    However, if the housing collapse starts sending shock waves through other parts of the economy then yes they may be forced to act to save or influence the whole. How there action affects retail interest rate will also depend on what happens with global rates. If they cut cash rates and the rest of the world is raising them, the positive impacts of their rate cut will be minimal if not nill. If the rest of the world raise rates it may even prevent them from lowering the cash rate because doing so could create severe inflation as the dollar drops and foreign capital gets diverted to where rates are higher.

    AUST is a net importer of capital, without capital inflow our economy is screwed so global rates in comparision to our rates are very important to this flow.
 
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