RBA is not responsible for housing undersupply

Comments on Robert Gottliebsen “Rate rises may backfire”, 2/11/2009, http://www.businessspectator.com.au/bs.nsf/Article/Cup-Day-deliberations-pd20091102-XDRU7?OpenDocument&src=sph

Robert, both you and Triguboff have got it wrong on this issue. The RBA is charged with price stability and now also has to take asset prices into account in fulfilling their duties.

Yes, faster rate rises will dampen construction and have a n negative effect on supply of housing in the media term. But that does not mean that the RBA should not act to combat price rises.

The undersupply of housing in the past decades has had its multiple reasons, and interest rate has been the least of them.

To overcome undersupply, those prime reasons, like government bottlenecks in planning and land release, red-tapes and etc have to be tackled. That is a fundamental principle of economics and public policy.

Restricting the RBA's hand is no solution to housing shortage and is a wrong approach to fixing it.