APRA keeps current macroprudential policy settings

Cost-of-living, the economic outlook, labour market, and borrowing cost were factors considered.

The Australian Prudential Regulation Authority (APRA) affirmed the appropriateness of current settings in its latest yearly update on the macroprudential policy.

The APRA considered factors such as cost-of-living pressures, the economic outlook, labour market conditions, and potential borrowing cost increases. Consequently:

• The countercyclical capital buffer stays at 1.0% to provide banks with an extra capital cushion for stress scenarios.
• The mortgage serviceability buffer remains at 3 percentage points to uphold prudent lending standards, safeguarding new borrowers from labour market risks and inflation.
• No capital distribution or lending limits are imposed, reflecting improved loan quality and current credit composition.

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APRA Chair John Lonsdale emphasises the importance of macroprudential policy in preserving financial system stability. 

Whilst current settings are deemed suitable, Lonsdale notes the dynamic nature of these measures and their potential adjustment to address emerging risks amid economic uncertainties and geopolitical tensions.