Credit growth eases
Credit growth eased to 0.5 per cent in May, on slightly slower business credit expansion, though it picked up to a solid 6.9 per cent over the year.
Housing credit growth was 0.49 per cent over the month - and has essentially held steady at around that level for over a year now - to increase by 5.8 per cent over the year.
The most notable trend here is that property investors are coming back into the housing market, with credit growth rising to a 31-month high over the year to May.
That said, transaction volumes are still fairly muted at this stage, and the housing credit impulse has not turned a corner just yet.
Probably there will be an acceleration later in the year as more attractive mortgage rates become available.
Inflation gauge eases
In other news, the Melbourne Institute's inflation gauge recorded price inflation of just 0.1 per cent in May (having declined -0.4 per cent in the previous month), taking the annual reading down to 2.4 per cent.
Trimmed mean inflation was also just 0.1 per cent over the month, pointing to further lower inflation readings ahead.
Source: Melbourne Institute data, Shane Oliver, AMP
An interest rate cut is fully priced in for the July 8 meeting announcement, and it's likely that we'll see more easing later in the year, according to market pricing.
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