RBA concedes $188b in cheap loans may have gone too far

Michael Read and John Kehoe

Oct 8, 2024 – 3.02pm

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The Reserve Bank of Australia board has conceded that the $188 billion in cheap credit it extended to banks during the pandemic may have been excessive and not enough work was done to forecast the significant financial losses the central bank incurred.

At least $43 billion in pandemic-era losses have forced the RBA to suspend paying multibillion-dollar annual dividends to the federal government and plunged the central bank’s balance sheet into negative equity, meaning the value of its liabilities exceeds assets.

Michael Read is the Financial Review's economics correspondent, reporting from the federal press gallery at Parliament House. He was previously an economist at the Reserve Bank of Australia and at UBS.

John Kehoe is economics editor at Parliament House, Canberra. He writes on economics, politics and business. John was Washington correspondent covering Donald Trump’s first election. He joined the Financial Review in 2008 from Treasury.