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Australian banks strong enough to withstand economic shock, support recovery - RBA

SYDNEY, Oct 9 (Reuters) - Australia’s financial system has the strength to withstand the nation’s large economic contraction and support the recovery even though risks are “elevated”, the country’s central bank said on Friday.

Risks to the financial system would be exacerbated by a weaker-than-expected economic recovery, stemming from further setbacks on the coronavirus-related health front or international political tensions, the Reserve Bank of Australia (RBA) said in its biannual Financial Stability Review.

The RBA is widely expected to lower its cash rate to 0.1% from a record low 0.25% at its November policy meeting.

Earlier this week, Australia’s conservative government announced a larger-than-expected fiscal stimulus, including a new wage subsidy scheme, to support the country’s virus-ravaged economy. (Reporting by Swati Pandey Editing by Shri Navaratnam)