Don't expect rate hikes before RBA's Philip Lowe exits in two years | Pendal Group
Hi there! Welcome to the new look Pendal website... Take a two minute tour to see what we’ve changed.

Mainstream Online Web Portal

Investors can view their accounts online via a secure web portal. After registering, you can access your account balances, periodical statements, tax statements, transaction histories and distribution statements / details.
Advisers will also have access to view their clients’ accounts online via the secure web portal.

Don’t expect rate hikes before RBA’s Philip Lowe exits in two years

This week the RBA’s Dr Philip Lowe indicated the big jump in house prices wasn’t really his area of concern. Pendal’s Tim Hext explains what that means

THE RESERVE Bank of Australia has for a long time now had an uncomfortable relationship with house prices.

They quite frankly don’t know whether to cheer them on or lament them.

When the RBA cuts rates, house prices take off, which is seen as a good thing since it should increase construction activity.

The RBA also subscribes to the wealth effect, hoping people will feel more confident in spending.

But skyrocketing house prices also mean a lot more debt for new home buyers. And young people are increasingly priced out, unless parents step in and help.

Forget equal opportunity.

This week the RBA’s Dr Lowe took the opportunity in a speech to say the massive recent leap in house prices — while helped by rate cuts — really weren’t the RBA’s area.

He pointed to other government policies such as tax, planning, transport and zoning as the structural factors that were responsible.

Find out about

Pendal’s Income and Fixed Interest funds

This of course leads to a wider discussion around whether high house prices — and asset markets in general — are good for society.

After all, the RBA’s third goal is the “welfare of the Australian people”.

This does not appear in most central banks mandates and gives the RBA scope beyond low inflation and full employment.

By setting the price of money the RBA has a huge impact on asset prices.

Of course strong asset prices are good news for asset owners — generally people in the older half of the population with homes and big super balances.

Whether this “trickles down” to significantly more spending is debatable.

It’s clear that Dr Lowe expects to see through to the end of his term in September 2023 with cash rates at zero.

He even expressed surprise why anyone would think otherwise.

Whether fiscal policy will address the widening wealth gaps is outside his control but he has no plans to use monetary policy, or at this stage even regulatory measures.

For asset owners he has our backs.



About Tim Hext and Pendal’s Income & Fixed Interest boutique

Tim Hext is a Pendal portfolio manager and head of government bond strategies in our Income and Fixed Interest team.

Tim has extensive experience in banking, financial markets and funding including senior positions with NSW Treasury Corporation (TCorp), Westpac Treasury, Commonwealth Bank of Australia, Deutsche Bank, Bain & Co and Swiss Bank Corporation.

Pendal’s Income and Fixed Interest boutique is one of the most experienced and well-regarded fixed income teams in Australia.

The team won Lonsec’s Active Fixed Income Fund of the Year award in 2021 and Zenith’s Australian Fixed Interest award in 2020.

Find out more about Pendal’s fixed interest strategies here


About Pendal Group

Pendal is a global investment management business focused on delivering superior investment returns for our clients through active management.

In 2023, Pendal became part of Perpetual Limited (ASX:PPT), bringing together two of Australia’s most respected active asset management brands to create a global leader in multi-boutique asset management with autonomous, world-class investment capabilities and a growing leadership position in ESG.

Contact a Pendal key account manager


This article has been prepared by Pendal Fund Services Limited (PFSL) ABN 13 161 249 332, AFSL No 431426 and the information contained within is current as at September 15, 2021. It is not to be published, or otherwise made available to any person other than the party to whom it is provided.

This article is for general information purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. It has been prepared without taking into account any recipient’s personal objectives, financial situation or needs. Because of this, recipients should, before acting on this information, consider its appropriateness having regard to their individual objectives, financial situation and needs. This information is not to be regarded as a securities recommendation.

The information in this article may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date. While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information in this article is complete and correct, to the maximum extent permitted by law neither PFSL nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information.

Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance. Past performance is not a reliable indicator of future performance.

Any projections contained in this article are predictive and should not be relied upon when making an investment decision or recommendation. While we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections.

The Target Market Determination (TMD) for the Fund is available at www.pendalgroup.com/ddo. You should obtain and consider the PDS and the TMD before deciding whether to acquire, continue to hold or dispose of units in the Fund.

Keep updated
Sign up to receive the latest news and views