Comments on Shaun Vahey "RBA: rates should hold, with a gradual return to neutral", 2/04/2013, https://theconversation.com/rba-rates-should-hold-with-a-gradual-return-to-neutral-13174
While the consensus view of unchanged rate this month is reasonable, the view of a higher side risk for rate to move in the next 12 months may be problematic.
A couple of reasons for the opposite view of a lower side risk for rate. One is that the next budge is likely to be contractionary and that is more likely to be followed by a more severe cut of government spending after the next federal election with a change of government.
Another is that international loose monetary policies will continue with increased forces as Japan has now joined the two other major industrialised economies, the US and the Euro zone. This international competition for loose monetary policy or race to the bottom will enforce the save heaven status of or attractiveness of the $A and may force it up further in value, putting further pressure on the Australian economy.
When everyone else is using unconventional monetary policy, it is too naive or silly for Australian monetary authority to continue the conventional way of its monetary policy.
While there is a risk for housing market to be further inflated, but that should be addressed through feasible policies, as opposed to the failed monetary policy to address more than one targets with only one tool.
It appears that it is now a time to have a review of macro economic policies including both monetary and fiscal policies to introduce new policy tools to improve the effectiveness of macro economic policies.
One way is to empower the RBA to have the ability to introduce a measure that can target lendings used in housing assets.