SYDNEY, March 20 (Reuters) - A top Australian central
banker on Monday said the country's banks were in a strong
position to weather global volatility, with capital levels well
above those required by regulations.
Speaking on the lags in monetary policy, Reserve Bank of
Australia (RBA) Assistant Governor Christopher Kent also said
the full impact of increases in interest rates was taking longer
to filter through to the economy due to a higher share of
fixed-rate mortgages and the savings amassed by households
during the pandemic.
"This means that it's likely to take longer than usual to
see the full effect of higher interest rates on household cash
flows and household spending," said Kent.
"The Bank will continue to closely monitor the transmission
of monetary policy and its impact on household spending, the
labour market and inflation," he added. "The Board will respond
as necessary to bring inflation back to target in a reasonable
time."
The central bank has lifted cash rates 10 times since last
May, taking them to a decade-high of 3.6% and flagged more would
likely be needed to bring inflation down.
However, financial markets have recently priced out any
chance of a further hike due to the strains in the global
banking system, and even imply some risk of a rate cut.
Kent noted the stress but played down the impact on local
banks.
"Volatility in Australian financial markets has picked up
but markets are still functioning and, most importantly,
Australian banks are unquestionably strong - the banks' capital
and liquidity positions are well above regulatory requirements,"
he said.
Kent noted Australian banks were also well-positioned to
repay loans made to them by the RBA during the pandemic, with
the first tranche of A$76 billion due between April and
September.
(Reporting by Wayne Cole in Sydney
Editing by Matthew Lewis)
Messaging: wayne.cole.thomsonreuters.com@reuters.net))
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