One is the international developments that I spoke about earlier. While Australia has been less directly affected by the US–China trade disputes than have many other countries, there is an indirect effect through slower global growth and increased global uncertainty. A second and more important factor is weak consumption growth.
Banking spread will eventually be aligned as competition deepens both for deposit and loan products. Fall in cost/income ratios coupled with sizeable balances in savings or short term deposit accounts (with less than 6-months maturity) or transactional accounts – which offer low returns below the inflation rate – should facilitate decline in spreads.