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Housing bubble will force RBA to raise rates

17 August 2009 Reporter

The Reserve Bank of Australia (RBA) governor Glenn Stevens has said he will not hesitate to raise interest rates if he sees a bubble forming in house prices.

In his address to the House Economics Committee on Friday, Mr Stevens said the RBA would raise rates if it saw that a bubble fuelled by debt was threatening financial stability.

Mr Stevens said he is wary of the risks to financial stability caused from a surge in asset prices.

According to official data from the Australian Bureau of Statistics, house prices are still about 1.4 per cent below their peak a year ago, but recovered strongly in the June quarter, increasing by 4.2 per cent.

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Housing bubble will force RBA to raise rates
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