Australia's Financial System at Risk: RBA Warns

0:00In Adelaide, it's March 19th. Here's what is happening. The Reserve Bank of Australia's latest financial stability review warns that risks to the economy are high and rising, mainly due to the war in the Middle East. Still, the bank says the financial system remains resilient, and most households can handle the two interest rate hikes so far. Banks are well placed to manage loan losses and keep lending if a downturn hits. Geopolitical tensions could spill over into a big global shock. Especially if oil supply disruptions drag on. Crude oil prices have jumped above $100 US dollars a barrel since the US and Israel struck Iran in late February that has pushed Australian petrol prices up fast. Treasurer Jim Chalmers said earlier this week that inflation might climb above 5% if the conflict continues and the Strait of Hormuz stays. Closed. That's the route for one-fifth of the world's oil. Households in businesses face higher costs, but the bank believes the system can cope.

1:01The review also flags overhyped artificial intelligence investments as a key worry. If the expected productivity gains fall short, it could lead to sharp drops in asset values and hit financial stability. Global share and bond markets look vulnerable to corrections, too, even though risk levels are low by history. Australia's heavy reliance on China adds another layer of risk. China's economy struggles with weak demand, falling property prices, high debt, and trade tensions. A sudden worsening there could cut demand for Australian exports and sparked global market jitters. We'd like to thank our sponsor for making this episode possible. Some travel miles to find peace. I just climb into bed and listen. www.sollypillow.com