The report notes that:
- Risks to the global economy remain elevated, stemming from high inflation and the necessary monetary policy response, a tightening of financial conditions and geopolitical fragmentation.
- Domestically, persistent inflation and higher interest rates could lead to slower growth and expose vulnerabilities, particularly in CRE markets.
- Households and businesses are, in aggregate, proving resilient to the inflationary shock so far, owing in part to the significant reduction in private indebtedness over the past decade.
- Domestic banks currently have headroom above regulatory capital and liquidity requirements which provides capacity to absorb shocks, while profitability is expected to benefit from rising net interest income.
Financial Stability Review June 2023 can be read here