Fitch Ratings-Sydney-27 April 2021: Withdrawal of central bank credit and QE measures pose the most serious risk for Australian credit markets over the next 12 months, according to a Fitch Ratings survey of fixed-income investors. More than half of investors nominated withdrawal as a high risk, well ahead of all other risks, and a similar amount expect additional QE and an extension of yield-curve control. Meanwhile, 77% expect further deployment of housing-related and macro-prudential measures.
A majority 84% of investors believe the official cash rate will remain at 0.1% over the next 12 months, supporting expectations of higher house prices and continued low unemployment. Almost a third believe house prices will rise by more than 10% in 2021, while no one believes house prices will decline.
Regulatory and legislative changes top the list of risks for Australian bank credit quality. Other risks that rank highly include stimulus withdrawal, the macroeconomy, property market exposure and funding access.