The Governor of the Reserve Bank has shrugged off concerns about transparency regarding its interest rate decisions.
After a speech about global financial developments in Sydney this morning, Glenn Stevens said that prior to the economic downturn, financial markets and economists were too relaxed about when central banks would move rates.
“One of the problems in the pre-crisis risk build-up period was arguably a little bit too much comfort being taken by financial markets and borrowers generally, that the central bank would never hurt them or surprise them,” he said.
“But we have certainly never made a commitment that there’ll not be surprises and nor should we and nor should any central bank in my opinion.”
In February, the RBA shocked economists and financial markets by leaving the cash rate on hold after three consecutive monthly rises at the end of last year.
Mr Stevens said the Reserve Bank’s decisions should be thought about within an agreed framework.
“I think that framework remains in place, certainly in our case,” he said.
“It’s possibly more difficult elsewhere, where unconventional things have had to be done and everybody’s working in unfamiliar territory.
“But here, we’ve got the same framework, the same objective, the same modus operandi, but there’ll still be the occasional controversy over did they or didn’t they or will they or wont’ they in this particular month,” he added.
“I don’t think actually think from an overall perspective that’s all that big a deal, frankly.”
Mr Stevens also rejected suggestions that increased demand from foreign investors and temporary residents is driving up Australian property prices.
When asked whether the abolition of restrictions on property purchases by temporary residents and foreign investors had led to house price inflation, he said there were no hard facts to support that theory.
“While there probably is some more prominence of foreign buyers, it’s most likely still a very small share of overall turnover,” Mr Stevens said.
“Mostly what’s pushing up housing prices over the past 15 months or more, is Australians, who are seeking to get or to upgrade their accommodation.”