Callam Pickering does a good job of outlining the importance of the loss of the AAA rating today at Dad’s Army:
It would undermine some of the work done by the RBA, as banks pass on their higher funding costs to households and businesses. According to Goldman Sachs, government bond yields would rise 11.7 basis points if there was a ‘negative outlook’ revision and obviously higher again on an actual downgrade.
That might not seem like much — what’s 11.7 basis points among friends? — but from the perspective of Australia’s banking system and the broader economy we are talking about billions of dollars.
