KPMG Economics comments on RBA decision

KPMG Economics comments on RBA decision

Brendan Rynne, KPMG Chief Economist, said: “Last week’s consumer price inflation figures were higher than expected, mainly due to weather-affected fresh food prices and a hike in petrol prices. These influences are transient, which you can see by the fact that the underlying inflation rate (trimmed mean) is still below the RBA’s target rate.

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On one hand, these figures could give the RBA theoretical justification for cutting interest rates tomorrow - but I would suggest it would do nothing to improve the housing affordability challenge currently facing Australia. Investor activity is still driving house prices and any rate cut will be swallowed up by that sector.”

Housing affordability should be the priority – and today KPMG Economics has released a paper putting forward new thinking on ways to mitigate the housing affordability crisis. 

  • reducing Capital Gains Tax to make investment marginally less attractive; 
  • abolishing stamp duty and conflating levies, land taxes and insurance into a single more-easily-managed property service tax; 
  • targeting supply to deliver agile, affordable and better located housing. 

There is no single solution; this issue requires a response across several fronts.”

Read more: Housing Affordability: the Australian Dream

Further information

Ian Welch
Senior Communications Manager, KPMG
T: 02 9335 7765 / 0400 818 891
E: iwelch@kpmg.com.au

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