From the AFR today:
The case for a second successive official interest rate cut from the Reserve Bank of Australia this week does not appear especially strong. As a result, the RBA should not – and most likely will not – cut interest rates on Melbourne Cup day. It will be the first time in six years that the RBA has not changed interest rates in November, but records are made to be broken...
[O]ngoing household caution and a downgrade to the economic growth outlook could be the justification for lowering rates again this week. But to my mind, it’s more likely the RBA will be cautious in using its blunt interest rate instrument to encourage more housing construction – lest it suddenly re-ignite speculative pressures in the established housing market.
Indeed, while modest to date, the effect of past interest rate cuts are nonetheless starting to accumulate. There was a large bounce in building approvals in September, and auction clearance rates have lifted. The latest Westpac/Melbourne Institute survey of households, moreover, reported a sharp increase in attitudes to housing. Some state government have also recently adjusted first home-buyer incentives to better encourage the purchase of new rather than established dwellings.
