Ahead of the Reserve Bank of Australia (RBA) policy decision, Goldman Sachs’ Australia and New Zealand Chief Economist Andrew Boak said in a Bloomberg TV interview, Australian households can withstand materially higher interest rates this year amid shrinking net debt.

Also read: Reserve Bank of Australia Preview: Will a 50 bps rate hike rescue AUD bulls? 

Key quotes

“It’s a very unusual situation, where at the moment financial buffers are very, very large and unprecedentedly large.”

“A Reserve Bank measure of household debt minus savings and deposits, that’s fallen to around 75% of disposable income from more than 100% during the 2008-09 crisis.”

“See the RBA delivering a 50 basis point increase today and forecasts the central bank’s terminal rate at 3.1%.”