Daily Commentary BY THE CURVE TEAM –

Credit Firms Over December

1st of February, 2021

A slow year for credit growth concluded with a modest gain, but the outlook is shifting.

Credit growth was up 0.3% for December. Despite the low rate, it is the highest rate since March.

It leaves credit growth up 1.8% for the year, which is the lowest annualised rate since the GFC. Housing credit growth led the gains, up 0.4% for the month and 3.5% for the year.

Government homebuilder grants have been an impetus for credit growth. New lending for housing is up 47% since May, which is expected to remain the backbone for credit growth as the economy recovers.

The RBA will be encouraged by the improving credit numbers. An update from the RBA will come on Tuesday with their first meeting since December.

No big changes are expected. This is followed by a speech from Governor Lowe on Wednesday and the statement on monetary policy on Friday.

Beyond updates from the RBA, trade balance data for December will be released on Thursday. Building approvals for December will be released on Wednesday and retail sales for December will be released Friday.

Josh Stewart

Associate- Money Markets