On Wednesday morning RBA released it Financial Stability Report. According to the report housing has picked up on record-low interest rates and that current owners have more cash to spend. Lower mortgage rates following a cut to the central bank's cash rate to a record low 2.25% in February are expected to boost housing demand further, the Reserve Bank of Australia said. There was no strong language on housing-market risk in the review but it reiterated the need to monitor this to ensure existing risk in the mortgage market doesn't worsen. Indicators of household stress are currently at low levels but could start to increase if labor-market conditions weaken further than currently envisaged," the RBA said.
The Australian economy continues to be underpinned by strong population growth, which remains elevated by international standards, but the pace of growth has eased considerably over the past year. A softer Australian dollar, combined with the end of the mining boom, should ease immigration rates over the next few years and weigh on population growth. Unless productivity fills the slack, softer population growth points to ongoing weakness in the Australian economy. The Australian population rose by 1.5% over the year to the September quarter.
This week markets will be looking at:
Building Approvals (Wednesday 1:30)
China's Manufacturing PMI (Wednesday 2:00)
HSBC Final Manufacturing PMI (Wednesday 2:45)
Trade Balance (Thursday 1:30)
