- Glenn Stevens, RBA Governor
Reserve Bank of Australia Governor Glenn Stevens said he is unwilling to fuel house price increase in an attempt to reduce unemployment faster, which jumped to a 12-year high in July, and warned about the creation of asset bubbles in the current low-interest rate environment. Home prices across Australia's state and territory capitals recorded the biggest winter jump since 2007, according to the RP Data-Rismark Home Value Index. Prices advanced 4.2% in the three months through August. Central bank data last week also indicated home loans to investors in the 12 months ended July surged 8.9%, the fastest pace since May 2008. Thus, RBA policy makers are content to keep interest rates on hold, even despite the fact that Australia is losing its developed-world-beating status as the mining investment boom that powered it through the global financial crisis fades.
Second-quarter GDP advanced 0.5% from the prior three months, when it rose 1.1%, a Bureau of Statistics report showed. The RBA slashed interest rates by 2.25 percentage points from late 2011 through August 2013 to a record-low 2.5% to bolster domestic-driven growth in industries including house building to offset weakening mining investment. A strong Australian Dollar has impeded that transition. Nevertheless, Stevens believes that the non-mining economy is slowly gaining a stable footing.
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