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The Reserve Bank of Australia seems to have struck a bullish note on the economic recovery in the country, as revealed by the minutes of April 6 Monetary Policy Meeting of its Board released today.
As per the RBA minutes, Australia is expected to continue its strong economic recovery in 2021 as well.
The board of the central bank observed that housing prices had increased significantly in recent months, buoyed primarily by the demand coming from first-time home buyers.
According to the RBA, the low interest rates prevailing in the country after the economic contraction last year, have been one of the primary drivers contributing to the increased home demand. The central bank has pegged the annualised growth in housing credit at about 4.5% in the past six months until February 2021.
The increase in the housing prices has also been complimented by the increase in the rentals, the central bank noted.
Also Read: House price boom driven by low interest rates: RBA
The RBA also seems to be optimistic about the resilience of the Australian banks, as it believes that strong profitability of these banks in the pre-pandemic era had enhanced their capital base. Even though, the provisions in the first half of 2020 had impacted their profitability, however, the trend rebounded quickly in the second half on hopes of strong recovery, it noted.
Despite the optimistic minutes revealed by the RBA, the top four banks on the ASX were trading in red on Tuesday: Commonwealth Bank of Australia (ASX:CBA) was down 82 basis points (bps), National Australia Bank Limited (ASX:NAB) was down 43 bps, Westpac Banking Corporation (ASX:WBC) declined by 28 bps, while Australia and New Zealand Banking Group Limited (ASX:ANZ) was down 55 bps.
