AU: RBA Meeting Minutes

Mon Apr 18 20:30:00 CDT 2016

The Reserve Bank of Australia published minutes of its meeting held on April 5. At that time, they left their key interest rate at 2 percent. The RBA said that low inflation would provide easing scope if needed. The Bank's low rates had played an important role in consumption and the housing market. The Bank expects inflation to remain low on rising value of the Australian dollar and overall low global inflation. Furthermore, wage growth is low and domestic cost pressures are subdued. The RBA discussed the rise of the Aussie and the impact on the broad economy and noted that net service exports were most sensitive to changes in the value of the currency. The Bank noted that a rise in commodity prices unlikely to lead to increased mining investment.

Oil and iron ore prices had risen noticeably since earlier in the year. The rise in commodity prices had been accompanied by an appreciation of the Australian dollar, which also partly reflected the expectation that US monetary policy would be more accommodative over the coming year than had been anticipated earlier. Members noted that an appreciating exchange rate could complicate progress in activity rebalancing towards the non-mining sectors of the economy.

Domestically, the latest national accounts data suggested that the economy grew at a moderate pace in the December quarter and more recent data were consistent with this having continued in early 2016. Over 2015, GDP growth was higher than earlier forecast, which went some way towards reconciling the strength in a range of labour market indicators over that period.

Members judged that there were reasonable prospects for continued growth in the economy, with inflation close to target. The Board therefore decided that the current setting of monetary policy remained appropriate. New information would allow the Board to reassess the outlook for inflation and decide whether the improvement in labour market conditions evident last year was continuing. Continued low inflation would provide scope to ease monetary policy further, should that be appropriate to lend support to demand.

The RBA issues minutes of its meetings with a two week lag.

Although the RBA's Reserve Bank Board issues a detailed statement at the conclusion of its monthly meetings, investors also look to the minutes for a more detailed description of current economic outlook both domestically and abroad along with the latest RBB policy thinking.

It is only recently that the RBA has released meeting minutes. At the conclusion of their December 2007 meeting, the RBA announced several changes to its communications policy. Previously, a statement was released only if a policy change was made. Now a statement is released at the conclusion of every meeting. Another change concerned the timing of the policy announcement. Rather than waiting until the next day, the announcement occurs immediately after the conclusion of the meeting. In addition, minutes are now released two weeks after the meeting.