No decline in lending standards


    SYDNEY- Australian regulators would consider tightening macroprudential policy if home lending standards declined and posed financial stability risks, though that point had not been reached yet, a senior central banker said on Wednesday.

    The country’s housing market is in the midst of a broad-based boom, raising fears of asset bubbles and prompting speculation the Reserve Bank of Australia (RBA) may have to pull interest rates higher to cap gains.

    “We don’t think monetary policy can or should try to control asset prices,” Reserve Bank of Australia (RBA) Assistant Governor Chris Kent said in Sydney, responding to questions following a speech on small business finance.

    “If asset prices are rising on the back of deteriorating lending standards and a rising financial risk, that would be of concern to the council members so they could consider a number of different responses,” he said, referring to the Council of Financial Regulators, which includes the prudential watchdog.