Tax cuts, not rate cuts, necessary

first_imgHousing Industry Association senior economist, Geordan Murray, said there had been market improvements lately which has not yet transferred to new housing.“The recent uptick in the market for established homes should allay concerns that further falls in home prices and the housing wealth effect could continue to apply a brake on household spending.”This as CBA Economics predicted RBA would cut again by 25 basis points in February 2020, if not sooner if unemployment figures did not pick up, to an unprecedented 0.5 per cent.“Any desire for monetary stimulus beyond that point would require a much worse economic outlook and probably manifest itself through unconventional policies and QE.” FOLLOW SOPHIE FOSTER ON FACEBOOK Economists warn the only thing rising is dwelling prices, again.CBA Economics chief economist Michael Blythe said “certainly some economic commentators and business leaders question the effectiveness of rate cuts in the current environment”.More from newsParks and wildlife the new lust-haves post coronavirus11 hours agoNoosa’s best beachfront penthouse is about to hit the market11 hours ago“Our view for a while now has been that interest rate cuts are of limited use: households tend to leave their home loan repayments unchanged, so little additional spending power is unleashed; the potential boost from a lower AUD is limited by still high commodity prices and the move to a current account surplus; and the negative impact on business and consumer confidence. Income tax cuts are a better response to the pressures in the household sector and the weakness in consumer spending.” RBA Governor Philip Lowe has indicated that the RBA board is prepared to cut again. Picture: Amos Aikman/The AustralianPressure is mounting for the Federal Government to step up with income tax handouts for families as economists warn the RBA racing to the bottom on interest rates will only increase dwelling prices, not jump-start spending. Number of homes sold for profit set to rise Beach house hits market with jawdropping price MORE: Housing set for fresh record highs Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 0:58Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:58 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD432p432p216p216p180p180pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenHow much do I need to retire?00:58 The RBA board yesterday cut its policy rate to a historic low 0.75 per cent, with Governor Philip Lowe confirming they were prepared to cut further “if needed”.RBA’s hand was forced by a global trend to lower interest rates, and its desire to support employment, income growth and keep the dollar steady.CBA Economics warned “debate about the desirability of the move has heated up”, with one area — dwelling prices — getting a boost especially in Sydney and Melbourne. 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This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenQuestions for Millennial home buyers01:41last_img

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