From the Reserve Bank of Australia Financial Stability Review (full text here)
- Global financial
stability risks are elevated and growing - Risks include China
property sector, a disorderly fall in global asset prices, exposure
to commercial real estate - Tightening in global
financial conditions could slow growth, lift unemployment - Fall in global asset
prices could raise funding costs in Australia, limit supply of credit - Australian financial
system sound, some pockets of stress among household borrowers - Australian banks
well capitalised, have low exposure to commercial property - Banks well
positioned to manage any increase in mortgage arrears, absorb loan
losses - Small, but rising
share of households in early stages of financial stress - Most borrowers well
placed should interest rates rise further - Most borrowers also
well placed to cope with extended period of high rates - Any increase in
unemployment would add to stress, but unlikely to threaten system
overall - Risks posed by
non-bank institutions in Australia remain low
Financial stress has risen, just a little according to the RBA above, in response to the rapid and sustained increase in interest rates. The RBA has hiked rates in battle to get inflation back under control. Its making a dent but the rate is still way above target level and that means rates will remain high for many months ahead.
AUD/USD is little changed in response to the report.
This article was written by Eamonn Sheridan at www.forexlive.com. Source