This financial stability assessment looks at the topics of:

• The global and macro-financial environment
• Resilience of Australian households and businesses
• Resilience of the Australian financial system

There is also a focus topic on the financial stability implications of artificial intelligence including the supply and demand factors, the economic benefits, the benefits and risks, and laws and regulations.

Findings

• Inflation has eased, but the global economic outlook is still uncertain, and financial system vulnerabilities remain.
• New technologies are enhancing operations in the economy and financial system, though they bring certain risks.
• Budget pressures continue to be felt across the Australian community, but the share of borrowers experiencing severe financial stress remains small.
• Most businesses are handling cash flow and balance sheet pressures, but conditions remain challenging for some, especially small businesses.
• Australian banks are well positioned to keep supporting the economy, even if loan arrears rise.
• Risks to the Australian financial system from financial institutions outside the banking sector remained contained.