Credit is readily available, borrowers seem to regard current interest rates as attractive, financial wealth is rising, as is private sector leverage. •  Developments in the exchange rate and interest rates charged by financial intermediaries since the last reduction in the cash rate in July last year have worked to magnify the effects of lower official rates.
The exchange rate has come down against major currencies, and competition among banks has reduced interest rates to business and personal borrowers. •  The most likely outcome over the next 12 months at the present policy setting is for inflation to return to its target range and for domestic demand to remain at or above trend growth.