The Australian Prudential Regulation Authority (APRA) has published its annual update on macroprudential policy outlining the reasons why existing policy settings remain appropriate.
In determining to keep its current capital- and credit-based macroprudential settings in place, APRA took account of ongoing cost-of-living pressures, the domestic and global economic outlook, particularly the expected easing in labour market conditions, and the potential for higher borrowing costs. APRA also considered the level of capital on bank balance sheets and the expected performance of their lending assets.
As a result of these considerations:
- the countercyclical capital buffer will remain at 1.0 per cent of risk weighted assets so that banks have an additional capital buffer for stress situations;
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