Reserve Bank of Australia Assistant Governor Christopher Kent said in an interview that monetary policy is somewhat restrictive and that the three cash rate increases earlier in 2026 are working through financial conditions. Lending and deposit rates have risen, scheduled mortgage payments are near their 2024 peak as a share of household disposable income, housing credit growth has slowed and the Australian dollar has appreciated about 5% on a trade-weighted basis since the start of the year. These effects underpin forecasts for slower growth in aggregate demand as needed to return inflation to target. The assessment remains uncertain because other forces are affecting financial conditions. Housing market weakness, including falling prices in Sydney and Melbourne and reduced new lending, may be making policy more restrictive than interest rate increases alone would imply, with federal tax changes also reducing investor demand. Conversely, AI-related global investment and large public debts are supporting overseas demand and bond yields, which may weigh on the Australian dollar and make a given cash rate less restrictive. The Monetary Policy Board will consider these factors as it updates its economic outlook and assesses future decisions.
Reserve Bank of Australia2026-08-13
Reserve Bank of Australia assesses monetary policy as somewhat restrictive after three cash rate increases
Reserve Bank of Australia Assistant Governor Christopher Kent assessed monetary policy as somewhat restrictive, with three cash rate increases lifting borrowing costs, slowing housing activity and contributing to a roughly 5% trade-weighted appreciation of the Australian dollar. Housing weakness may be adding to restraint, while global AI investment and higher overseas bond yields may make Australian financial conditions less restrictive.