POV ### APRA PROPOSALS RAISE BAR FOR RBA........>

RBA: POV ### APRA PROPOSALS RAISE BAR FOR RBA CUTS, DOESNT REMOVE CHANCE

- Interesting timing for the latest APRA announcement that "in a letter to ADIs

issued today, APRA has proposed removing its guidance that ADIs should assess

whether borrowers can afford their repayment obligations using a minimum

interest rate of at least 7 per cent. Instead, ADIs would be permitted to review

and set their own minimum interest rate floor for use in serviceability

assessments. APRA has also proposed that ADIs' serviceability assessments

incorporate an interest rate buffer of 2.5 per cent."

- This would provide support for the housing market, which could be magnified by

rate cuts or at least buy the RBA some breathing space in terms of assessing how

such a move would feed through into consumer behaviour/inflation dynamics.

- 5% chance of pricing of a rate cut pulled out of June OIS in the 10 minutes

since the headlines, now seen as 50/50 chance.

- RBA May meeting minutes & Governor Lowe's address due later today are key for

the immediate MonPol outlook.