In a report released over the weekend, OECD said Australia’s “long span of positive output growth continues”. And, “continued robust output growth of around 3% is projected in the near future”. On RBA, OECD said that “in the absence of negative shocks, policy rates should start to rise soon”. It warned that “monetary conditions remain very accommodative, with the risk of imbalances accumulating further if the low-interest rate environment persists.” And, “in the absence of a downturn, a gradual tightening should start as inflation edges up and wage growth gains momentum.”
However, OECD also warned that the housing market is “a source of vulnerability”. So far, “data point to a soft landing without substantial consequence for the overall economy.” But “risk of a hard landing remains.” And it urged authorities to
“prepare contingency plans for a severe collapse in the housing market. These should include the possibility of a crisis situation in one or more financial institutions.
