While Australia’s financial system has remained resilient, a rise in poorly performing commercial property loans needs to be monitored, the central bank said.

“There has been a more significant deterioration in the quality of banks’ business loan portfolios, particularly for commercial property,” the Reserve Bank of Australia said in its half-yearly financial stability review published today in Sydney. “This remains an area to watch closely in the period ahead.”

Australia’s central bank is tracking the nation’s financial stability after boosting the benchmark lending rate this month for the fourth time in five meetings as the economy rebounds. Borrowing costs need to continue being moved gradually toward “more normal levels” to prevent a surge in inflation, Assistant Governor Philip Lowe told a function in Sydney today.

bloomberg.com