Total credit provided to the private sector by banks and other lenders rose by 0.2 per cent in July after falling by 0.1 per cent in June.
Over the year to July, total credit rose by 2.7 per cent, the Reserve Bank of Australia (RBA) said on Wednesday. That equates to approximately one quarter of the average growth rate of 10.8 per cent over the preceding decade.
Credit growth over the most recent three months was slower than the annual growth rate, at just 1.8 per cent on an annualised basis. The seasonally adjusted figures also showed that housing credit rose by 0.4 per cent in July and by 5.9 per cent through the year to July. That annual growth rate of housing credit set a new low for the series, which extends back to 1976.
Other personal credit outstanding fell by 0.3 per cent in July, the fourth monthly fall in a row, to be down by a marginal 0.1 per cent from a year before. This was the first annual fall since the post-crisis decline in 2009.
Business credit was unchanged in July and has now not posted a rise since March, after falling in April and June and being steady in May. With a fall of 1.9 per cent over the year to July, business credit has now not posted an annual increase since June 2009.
In his introductory address for his testimony to a parliamentary committee last Friday, RBA governor Glenn Stevens cited slowing credit growth as evidence that monetary conditions are exerting “a fair degree of restraint”.
That in turn was one of the reasons Mr Stevens said the central bank decided at its August 2 policy meeting to wait to see how the economy evolves, rather than put into effect its earlier plan to raise interest rates to quell inflationary pressures.
