As Stevens says, the world economy is slowing, sentiment in financial markets is "fragile" (some would say panicked), and our banks are passing on rates rises beyond the official rates and "some tightening in credit standards for more risky borrowers is occurring".
Between the RBA and the banks, the overall tightening in monetary policy has been, as he says, "substantial". In fact, since the cycle turned in 2002 there have now been 12 increases of 25 basis points each time in official rates with the banks adding another 30 basis points or more by increasing their home loan rates beyond the official moves.
As significantly, there is some evidence of credit rationing as the banks struggle to take onto their balance sheets the assets formerly held off-balance-sheet or by non-bank lenders who now either have no access to funding or can't source funding on terms that enable them to compete.
Credit statistics earlier this week show that business lending (where the rate increases by the banks are less visible, but where they were made earlier than the politically-sensitive home loan rate rises) has slowed dramatically, to its lowest growth rate in about four years.
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