(Adds detail, comments on domestic banks)
By Wayne Cole
SYDNEY, March 20 (Reuters) - A top Australian central
banker on Monday said stress in the global banking system was
mainly confined to a small number of poorly managed banks and
was just one of many considerations for domestic monetary
policy.
Asked whether the stress argued for a pause in rate rises,
Reserve Bank of Australia (RBA) Assistant Governor Christopher
Kent said the Board would consider financial conditions at its
next policy meeting in April, but that was just one of many
factors.
"The Board will be taking account of financial conditions,
as they do all the time," said Kent. "It's a few institutions
that were poorly managed."
The central bank has said higher rates would likely be
needed to bring inflation down, but markets are wagering the
strains in global banking mean the RBA's 10-month tightening
campaign is essentially over. Kent said the RBA was not involved in the dollar
liquidity operations announced by the Federal Reserve and
several other major central banks on Sunday, but that he had
been in touch with his counterparts abroad.
Kent said the global banking system was in better shape than
it had been during the global financial crises.
Earlier in a speech, Kent said the Australian banking system
was "unquestionably strong" with capital levels well above those
required by regulations.
Speaking on the lags in monetary policy, 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%.
Kent noted the stress in the global financial system 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.
(Reporting by Wayne Cole in Sydney
Editing by Matthew Lewis and Sam Holmes)
Messaging: wayne.cole.thomsonreuters.com@reuters.net))
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