##cy requirements. see for instance kent c ( 2021 ), ‘ small business finance in the pandemic ’, speech at the australian finance industry association, sydney, 17 march. [ 21 ] see zaman and tanewski, n 4. [ 22 ] some of this compression likely reflects that since the tightening in monetary policy in 2022, rates on new loans for large firms increased by more than for small firms, as the three - month bbsw rate ( the reference for most business lending ) increased by more than the cash rate ( a key reference for small business loans ). [ 23 ] see connolly e and j bank ( 2018 ), ‘ access to small business finance ’, rba bulletin, september ; mccowage and nunn, n 19. blade disclaimer notice r e s e r v e b a n k o f au s t r a l i a

a return to the boom. many people say that we need more “ confidence ” in the economy among both households and businesses. we do, but it has to be the right sort of confidence. the kind of confidence based on nothing more than expectations of ever - increasing housing prices, with the associated willingness to continue increasing leverage, on the assumption that this is a sure way to wealth, would not be the right kind. unfortunately, we have been rather too prone to that misplaced optimism on occasion. you don ’ t have to be a believer in bubbles to think that a return to sizeable price increases and higher household gearing from still reasonably high current levels would be a risky approach. it would surely be a false basis for confidence. the intended effect of recent policy actions is certainly not to pump up speculative demand for assets. 6 as it happens, our judgement is that the risk of re - igniting a boom in borrowing and prices is not very high, and this was a key consideration in decisions to lower interest rates over the past eight months. hence, i do not think we should set monetary policy to foster a renewed gearing up by households. we can help, at the margin, the process of borrowers getting their balance sheets into better shape. to the extent that softer demand conditions have resulted from as in 2009, the challenge is “ how to ensure that the ready availability and low cost of housing finance is translated into more dwellings, not just higher prices ”. see stevens, g, “ challenges for economic policy ”, address to the anika foundation luncheon, sydney, 28 july 2009. bis central bankers ’ speeches households or some businesses restraining spending in an effort to get debt down, and this leads to lower inflation, our inflation targeting framework tells us to ease monetary policy. that is what we have been doing. the reduction in interest rates over the past eight months or so – 125 basis points on the cash rate and something less than that, but still quite a significant fall, in the structure of intermediaries ’ lending rates – will speed up, at the margin, the process of deleveraging for those who need or want to undertake it. in saying that, of course, we cannot neglect the interests of those who live off the return from their savings and who rightly expect us to preserve the real value of those savings. popular discussion of interest rates routinely ignores this element, focusing almost exclusively on the minority of the population – just over one - third – who