The Reserve Bank of Australia’s Assistant Governor (Financial System) Michele Bullock just spoke at the Toowoomba Chamber of Commerce Business Breakfast. Some of his notable statements, as conveyed via Reuters, are as follows:
- Financial health of businesses looks sound, no threat to banks.
- Retailers and investors face number of risks given intense competition.
- Currently no strong evidence of widespread financial vulnerability in retail sector.
- Unlisted retailers tend to have more debt, making them more vulnerable.
- Difficulties in retail sector unlikely to pose risk to the banking sector.
- Profitability in mining sector highest in the past 10 years.
- Mining firms’ balance sheets appear well placed to absorb shocks.
- Small businesses face tighter credit conditions.
- Banks dealing with mortgage arrears in some regions, not a threat to stability.
FX Implications
Even if most comments were targeted towards businesses, the underlying positive tone can please the Aussie buyers, despite showing no immediate reaction. However, cautious trading is more likely to prevail ahead of China’s July month Trade Balance data.
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