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Macroprudential risk for the Aussie - RBS

FXStreet (Bali) - The RBA has set out the case for macroprudential measures to take heat out of the Australian property market, aimed at keeping rates lower for longer and help to keep AUD lower, notes Greg Gibbs, FX Strategist at RBS.

Key Quotes

"The Australian Treasurer has hinted that such measures are being considered by the RBA and APRA, and the IMF has strongly endorsed them as a "first line of defence" to avoid "premature tightening of monetary policy" in its report for the G20 in Australia last weekend. RBA Governor Stevens speaks on Thursday in Melbourne."

"The venue and timing, coming after the semi-annual Financial Stability Report is released on Wednesday, makes this an ideal time to move this policy debate forward."

"Macroprudential measures in the Australian context should target investors and might resemble those used in Hong Kong and Singapore limiting borrowing for second homes. These might appear more powerful than those employed by New Zealand."

"The aim would be to keep rates lower for longer and help lower the value of the AUD. We continue to see AUD/CAD downside potential and the AUD/NZD may also fall further in the wake of the strong result by the ruling government in New Zealand elections over the weekend."

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