The Reserve Bank of Australia’s Financial Stability Review released a few minutes before press time, revealed growing concerns about a slowdown in China and its repercussions on the global economy.
Key quotes (Source: Reuters)
- Risk global financial volatility could rise for a number of reasons.
- Trade tensions, a slowdown in China could trigger a global economic downturn.
- The Australian economy is improving but the housing market has slowed.
- Sentiment toward housing market has become more cautious, outlook subdued.
- Drop in home prices to date has been small relative to previous gains, rapid or large fall in home prices could disrupt financial system, household finances.
- The level of household debt is high but does not appear to be a large risk to the financial system.
- Debt levels could be a risk if they cause households to cut back on consumption.
- Possible, but not likely, excessive tightening in lending standards could fuel housing slowdown.
- The resilience of the financial system overall has improved, capital ratios are strong.
- Banks’ returns on equity have declined but still high by international standard.
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