Stevens says wait and see on rates

Reserve Bank governor Glenn Stevens highlighted the divergent trends in housing and business credit growth in his statement yesterday, following the RBA board meeting. The board decided to leave the cash rate at 3.75 per cent.

Stevens said that while credit for housing was expanding at a solid pace, business credit was still falling “as companies have sought to reduce leverage and lenders have imposed tighter lending standards, and in some cases sought to scale back their balance sheets.”

Stevens said the RBA’s view was that “credit conditions were difficult for many small businesses.” The board wants a clearer picture of how rate rises are affecting business before moving again.

Source: Banking Day