''What's more, the sustained low rates have the negative consequences of potentially firing up an overheated housing market or creating problems down the line elsewhere.''
The RBA has said, unequivocally, that it wants to see residential construction fill some of the void as the resources boom subsides.
But there will not be a pick up in new home building until there is a noticeable rise in established house prices.
So the RBA will continue to lower rates until established house prices increase enough to fire up residential construction.
Unless the resources sector finds a second wind, which is obviously highly unlikely.
Thus, rates will continue to fall until established house prices rise at a faster rate.
Its a done deal.
Forget about the ''emergency level'' cash rate. Discounted variable rates are around 5.5%. Thats still very high by world standards.
Now ask yourself, what will happen if they are lowered to around, 5%? 4.5%? 4%?
Why are brokers now rating stocks such as Boral as ''outperform"?
