Confidence in record low interest rates being here to stay could push house prices sky high. Ultimately, the RBA sees rising asset prices (or home values) as a net positive, despite some economists warning that the unprecedented low interest rates could destabilise the economy. The internal RBA briefing noted that a rise in house prices (and other assets such as shares) would lead to increased household wealth and improved cash flow. As a result, Aussies would get out and spend more, and that in turn would stimulate the economy and business investment. The RBA internal report was accessed by FOI act.
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Subscriber only Insolvencies are expected to spike in coming months as Australian businesses exit temporary protections imposed in the early days of the pandemic. SM Solvency Accountants projects 15,800 companies will enter external administration by September 2021. Personal insolvencies are expected to reach 25,500 by September, peaking in March. SM Solvency Accountants partner Brendan Nixon said the backlog of insolvencies coupled with the tapering of economic support from the federal government would create a wave of insolvencies in 2021. There will be some bounce back with the economy but I think things will become clearer when businesses are forced to commit to operating again long term, he said.
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