Australia’s central bank sees the drag from tight financial conditions easing, helping the economy to stay near full employment with inflation returning to target, according to Assistant Governor Christopher Kent.
Kent, the Reserve Bank’s point-person for financial markets, highlighted narrowing loan spreads and households making extra mortgage payments in response to lower interest rates as signs of easing conditions. Credit growth has also picked up as housing demand increased, while strong competition among lenders and favorable funding costs have boosted business borrowing.