“Capital, liquidity positions well above APRA’s regulatory requirements,” said Christopher Kent, Reserve Bank of Australia’s (RBA) Assistant Governor (Financial Markets).
“Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent also said the full impact of increases in interest rates was taking longer to filter through to the economy due to a higher share of fixed-rate mortgages and the savings amassed by households during the pandemic,” reported Reuters.
More comments
RBA is very conscious of the challenges facing borrowers from rapid rate rises.
Household savings amassed during pandemic adding to lag in monetary policy.
A wide range of borrowers appear to have built up sizeable mortgage buffers.
This means that it’s likely to take longer than usual to see the full effect of higher interest rates on household cash flows and household spending.
The bank will continue to closely monitor the transmission of monetary policy and its impact on household spending, the labour market and inflation.
The Board will respond as necessary to bring inflation back to target in a reasonable time.
Volatility in Australian financial markets has picked up but markets are still functioning and, most importantly, Australian banks are unquestionably strong – the banks’ capital and liquidity positions are well above regulatory requirements.
Australian banks were also well-positioned to repay loans made to them by the RBA during the pandemic, with the first tranche of A$76 billion due between April and September.
AUD/USD retreats from intraday high
Despite the positive comments, AUD/USD pares intraday gains as it drops from near the daily top surrounding 0.6720 to 0.6705 by the press time.
