The RBA might be tempted by this option if it feels it has to tighten monetary policy and not just rely on its overnight cash rate to do the heavy-lifting. auspol ausecon
It is well known that the incomplete pass-through of the RBA’s hikes to the average home loan rate on existing mortgages reflects the surge in fixed-rate lending as a result of the RBA providing banks with $189 billion of three-year loans during the pandemic at an incredibly low fixed cost of between 0.1 per cent and 0.25 per cent annually.
The RBA is fully aware of these discontinuities. It is ultimately targeting borrowing rates, and if lenders do not fully pass on its cash rate changes it will continue lifting rates until it secures the practical cost of capital that it wants to see prevailing across the economy.It does, however, have another trick up its sleeve.
Martin Place might be tempted by this option if it feels it has to tighten monetary policy on a more broad-based basis rather than just relying on its overnight cash rate to do the heavy lifting, which would be similar to the logic it applied during the pandemic. Where the numbers get much more interesting is if we instead focus on how the banks’ balance sheets have been growing over phe last few months. Among the four majors, loan growth has decelerated from an 11 per cent, three-month annualised pace in July last year to just 3 per cent in March this year.
Australia Latest News, Australia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
'I don't know whether our economy can withstand that': Mark Bouris' grim RBA predictionBusinessman Mark Bouris is wary of the effect further rate hikes could have on the Australian economy, telling Sky News Australia host Peter Stefanovic the likelihood of a recession continues to grow.
Read more »
‘Get to a place of safety’: ex-royal bodyguard on paparazzi chasesFormer royal protection officer advises how Harry and Meghan should respond when harassed by press photographers
Read more »
Sydney the best place in the world to live, global survey findsSydney has been named the best city in the world to live, by a survey conducted by Brand Finance.
Read more »
Killers of the Flower Moon: first trailer for Martin Scorsese dramaThe highly anticipated adaptation of David Grann’s non-fiction book stars Leonardo DiCaprio, Robert De Niro and Lily Gladstone
Read more »
Unemployment rate rises to 3.7 per centThe unemployment rate rose by 0.1 percentage points to 3.7 per cent in April, softening the case for another interest rate rise from the Reserve Bank next month.
Read more »
Australia's unemployment rate rises defying market expectationsAustralia's unemployment rate has risen to 3.7 per cent in April, defying market expectations with economists forecasting it would remain flat. 9News
Read more »