RBA’s bubble warning has not changed ‘on hold’ prediction: Westpac

Despite the Reserve Bank of Australia’s concerns about the housing market’s price growth, it appears that not all are changing their predictions of a period of rate stability and macro involvement isn’t on everyone’s radar.

Westpac’s chief economist, Bill Evans, has noted in their latest bulletin that they are not altering their rate forecast – expecting the first hike to be in 2015.

He notes that they expect the rise to be in 2015’s September quarter, driven by a global outlook, modest lift in consumer spending momentum, non-mining investment and a falling unemployment rate.

While house prices and credit growth are also expected to also be rising, he says it will not be at a sufficiently rapid pace to trigger a rate increase.

However, Evans does note that the RBA is likely to either maintain or step up its public warning around housing prices and investor activity.

“A reasonable conclusion is that Australia is unlikely to introduce the New Zealand style of direct macro prudential controls,” he said.

He noted that APRA may lift its intensity of communication to ADI boards and even impose another round of stress testing, though it’s conceded that banks already regularly conduct stress testing.