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It’s not a complete replacement for interest rate changes, but the three levers can be used in combination to manage the economy more effectively and more fairly.

This is just one of the ways that we might think a little deeper about Australia’s strategic stockpile of cash, without jeopardising its fundamental superannuation purpose.

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For example, super funds are designed to provide for the future, but are assessed on quarter-year returns. Yet private wealth may be oversold if our natural, social and human capital are being shredded in the meantime.

Perhaps our super can help address some of our most intractable problems. Take housing. In Europe, pension funds invest heaving in high-quality, long-term rental housing near city centres. Their returns are set-and-forget at a level compatible with their low long-term risk.

This doesn’t happen in Australia, but it might. About 30% of our super already sits in low-return, low-risk bonds, so a slice of that could create just the housing that Australia needs, with no downside to anyone in the picture.

It’s currently hard for a super fund to do this, as they compete on those quarterly returns. But to keep competition on an even playing field, what if all super funds were required to invest say 15% of its pool in the public housing and other infrastructure that our society needs.

Many would say that our super fund is just that – for super – and should not be meddled with. We would say the pool is now so large that it is already having unintended implications for our economy. And, that we need to draw on these funds directly because governments are no longer prepared to borrow or tax more for essential purposes.

And then there are those who say ‘That’s our money and you can’t say what it’s for’. To which we reply that we wouldn’t have it if our government hadn’t set up the scheme, and that we wouldn’t have so much without the tax breaks it offers.

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So let’s give a little more thought to how we can best use this national wealth for national benefit. We have precious few other choices.

Josh Dowse and Ian Woods are the authors of ESG Unlocked: How successful companies and investors build our natural, social, human and financial capital.

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May 3 (Reuters) – U.S. Federal Reserve Governor Michael Barr said stress in private credit could spark “psychological ‌contagion” leading to a broader credit crunch, ‌Bloomberg News reported on Sunday.

While direct links between banks and private ​credit do not yet appear “super worrisome,” there were other areas of concern such as the insurance sector’s overlaps with private lenders, Barr said in an interview with ‌Bloomberg News.

“People might look ⁠at private credit, and instead of saying, ‘This is an idiosyncratic problem, these were high-risk ⁠loans, the rest of the corporate sector is different,’ they might say, ‘Wow, there seem to be cracks in ​our corporate ​sector. Maybe over here ​in the corporate bond ‌market, there are also cracks,’” Barr said.

Barr also added that “then you could have a credit pullback, and that could lead to more financial strain.”

Private credit firms have been under stress because of the market’s recent ‌downturn with some investors retreating ​from these investments due to worries ​about valuations and ​lending standards following a handful of high-profile ‌bankruptcies.

Fed Chair Jerome Powell said ​in March ​central bank officials are watching developments in the private credit sector for signs of trouble, but ​do not currently ‌see issues there bringing down the financial system ​as a whole.

(Reporting by Angela Christy in ​Bengaluru; Editing by Will Dunham)

A repeat of the Reserve Bank board’s split decision to raise interest rates in March could be on the cards as the central bank frets over the dual threats of high inflation and a stalling economy.

Financial markets and most economists are tipping a third straight rate hike on Tuesday.

ANZ Bank head of Australian economics Adam Boyton is part of the chorus predicting the Reserve Bank will lift the official cash rate to 4.35 per cent – the same level as its post-COVID-19 pandemic peak.

But he thinks it won’t be a lay down misere, with several members likely to vote in favour of keeping rates on hold.

The combination of a tight labour market, above-target underlying inflation and concerns inflation expectations could become unanchored all point in favour of a hike.

At the same time, the US-Israeli war with Iran’s effects on the economy could convince some board members more time is needed to weigh the impact on economic growth.

In March, four of the board’s nine members voted unsuccessfully to keep rates on hold, arguing there was too much uncertainty around the domestic growth outlook and how the conflict in the Middle East would evolve.

Uncertainty around the path forward would be reflected in the bank’s post-meeting communications, Mr Boyton said, with no forward guidance expected.

“We expect, however, a tilt in the language in the post-meeting statement that will open the door to an extended pause,” he said.

Financial markets put the chance of a hike on Tuesday at about three-quarters and have fully priced in at least one more rate rise by November.

Westpac forecasts another two hikes after May, in June and August.

But economists at ANZ, NAB, Commonwealth Bank, Deutsche Bank and HSBC think the Reserve Bank will stand pat after Tuesday.

“Whether the RBA delivers further tightening beyond May will depend on how quickly the economy weakens,” HSBC’s local chief economist Paul Bloxham said.

“We see a recent sharp weakening in sentiment as a clear signal that a downturn is already under way.

“Our central case is that, beyond the May hike, the RBA remains on hold.”

Updated economic forecasts by Reserve Bank staff, released simultaneously to the monetary policy decision, will be closely scrutinised for hints about the path forward for rates.

Earlier on Tuesday, the Australian Bureau of Statistics will release household spending figures for March.

Economists predict a rise of 1.5 per cent, driven by higher fuel spending.

Building approvals figures for March will be published on Monday.

Trend dwelling approvals have been gradually rising since early 2024 to just over 210,000 per year.

But the slow progress the industry has been making in recent years could be scuppered by surging building material prices as a result of the Iran war, the National Housing Supply and Affordability Council has warned.

On Wall Street, the S&P 500 and the Nasdaq advanced to record closing highs on Friday, boosted by ‌robust earnings and a dip in crude prices

The S&P 500 gained 20.46 points, or 0.28 per cent, to end at 7,229.47 points, while the Nasdaq Composite gained 217.67 points, or 0.87 per cent, to 25,109.98.

The Dow Jones Industrial Average fell 155.67 points, or 0.31 per cent, to 49,496.47.

Australia’s share market broke its worst losing streak since 2018 as oil prices eased from four-year highs and strong US earnings boosted investor sentiment.

The S&P/ASX200 gained 64 points on Friday, up 0.74 per cent, to 8,729.8, while the broader All Ordinaries improved by 67 points, or 0.75 per cent, to 8,954.6.