RBA holds rates at 0.1pc, âcarefullyâ monitoring housing
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The Reserve Bank of Australia has hinted that it is âcarefullyâ watching lending risks in the housing market after prices hit their fastest growth in 32 years.
The central bank held the cash rate target at a record low 0.1 per cent, kept the size of its $200 billion bond-buying program and hinted at even further purchases beyond its current program.
In its first monetary policy decision since reports of the three-decade high in house price growth, RBA governor Philip Lowe said the bank was monitoring risks, but remained confident such they were manageable, with borrowing for speculative investment subdued.
Australia recession: Job vacancies surge but shortage hit growth
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CBA will undercut Afterpay in buy now, pay later
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Commonwealth Bank will undercut Afterpay and conduct credit checks to reduce the risk of customers overcommitting themselves in the biggest competitive response of a major bank to the wildly successful buy now, pay later phenomenon.
CBAâs new product - CommBank BNPL - will allow up to 4 million of its retail customers to pay in four instalments. CBA aims to outflank the leaders of the rapidly growing buy now, pay later sector - such as Afterpay and Zip Co - but analysts are unsure whether the bank will be able to catch them after ceding so much territory.
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The stage-three income tax cuts loom as a flashpoint at the next federal election with Labor considering options ranging from dumping the cuts altogether, paring them back, or possibly keeping them.
A day after Treasurer Josh Frydenberg told the Coalition party room that Labor’s ongoing refusal to commit to the cuts signalled another “significant contest” over tax at the next election, Opposition sources said the vastly changed economic circumstances would make it easier to argue against the cuts.
Treasurer Josh Frydenberg announced a temporary investment allowance in the last budget.
Alex Ellinghausen
The stage-three cuts have already been legislated to begin on July 1, 2024. At the time they were legislated, they were forecast to cost $137 billion by the end of the decade.
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By now, every weekend’s auction news is becoming familiar. Yet another record result.
Philip Lowe’s regular reassurances that national house prices are on average only back to where they were four years ago won’t hold true much longer. In many cities and regions, they have already soared much higher.
In suburban Perth, amazement at how rapidly the West Australian property market is accelerating is just as pronounced as it is in Sydney even if prices are still much lower.
Despite surging house prices, RBA governor Philip Lowe is determined to keep the cash rate low to stimulate the jobs market and wages growth.
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