In February 2025, Australia’s private sector credit increased by 0.5% month-on-month, matching expectations and the previous month’s growth rate.
Business and housing credit were the primary contributors to this growth, according to data from the Reserve Bank of Australia.
Credit Growth Remains Steady
That February figure—0.5%—is a repeat of January’s gain and it landed exactly where economists had forecast. In that regard, there’s no discomfort in the underlying pace, and no upward revision to reconsider sentiment.
Business credit pushed ahead, a move that hints at a steady appetite for investment. It didn’t accelerate, but nor did it retreat. At the same time, housing credit continued to support a solid chunk of the private credit expansion. Neither segment showed any signs of deteriorating fundamentals. The RBA’s data essentially tells us that the gears of credit distribution are turning at a controlled, predictable pace, with neither heat nor friction exceeding manageable levels.
Lowe’s previous commentary still hangs in the background of sentiment, even with Bullock now in the chair. That ongoing alignment between central bank policy and sector behaviour helps temper sharp positioning. From our vantage point, this stability narrows the range of unexpected shifts in short-term rates, giving less room for volatility shocks to expand.
Market Dynamics And Rate Implications
It’s also worth keeping an eye on the monthly breakdown over the next few weeks. If business credit starts showing sharper upward motion, while housing remains constant or moderates, that dynamic could adjust rate implieds across the front end. Given that the RBA has kept a cautious tone recently, any re-acceleration in business borrowing might be interpreted as a knock-on effect of delayed investment flows catching up to prior easing assumptions.
The takeaway for us is relatively clear: pricing risk around near-term rate movement should remain conservative. Fluctuations tied to macro signals, not sentiment swings, will guide our recalibrations. Watch how commercial lending responds to global cost of capital trends—especially from North America, where Powell’s emphasis on data-dependence has gained traction again. We’re not looking for divergence, but parallel motion. If the borrowing side outpaces expectations, it may necessitate tighter hedging on the short leg.
For now, policymakers have been consistent in messaging. Derivatives tied to forward rate agreements and STIRs are likely to continue reflecting middling confidence in directional change, at least until CPI figures confirm a tack one way or the other. We would act more decisively only on a reversal in trend, not a single print.
So, while the numbers aren’t sparking headlines, they are writing a paragraph. For those managing positioning, narrative matters less than sequence. Sequence we can price; stories we cannot.
