Australia’s Financial System Remains Resilient: RBA

australia’s-financial-system-remains-resilient:-rba

Australia’s financial system remained resilient and well positioned to support the economy through a more challenging period, the Reserve Bank of Australia said in its half-yearly Financial Stability Review, released Friday.

The RBA said banks have strong capital and liquidity positions. Banks are well placed to continue lending even if the economic outlook were to deteriorate markedly, the central bank observed.

However, the bank noted that some households and businesses are already facing more challenging conditions and the combination of higher interest rates and inflation will further increase pressure on household budgets.

Despite tight labor market conditions, household income growth has not kept pace with inflation. This has left households with less capacity to meet their rising housing costs, while maintaining their consumption and rate of saving.

Household perceptions of their own financial situation have weakened considerably. Increases in indicators of financial stress are likely in the period ahead.

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