AU: RBA Meeting Minutes

August 15, 2016 08:30 CDT

The RBA published minutes from its August 2 meeting. At that time, the RBA lowered its policy interest rate by 25 basis points to a record low of 1.5 percent. The minutes did not provide an explicit bias.

The minutes noted that there was considerable uncertainty over local inflation. The latest CPI data for Australia had confirmed that inflation pressures were subdued as had been expected. Underlying inflation was expected to remain low for a time before picking up gradually as spare capacity in labour and many product markets diminished. Commodity prices overall had risen since the previous meeting and the Australian dollar exchange rate had appreciated a little since earlier in the year. Changes to expectations about central banks' policies continued to have an important influence on global exchange rate developments. The outlook for GDP and unemployment were little changed.

In considering the stance of monetary policy, members noted that GDP growth in Australia's major trading partners had remained slightly below average in the first half of 2016 and was expected to continue at around this pace in each year of the forecast period. This forecast was largely as had been expected three months earlier. Growth in China had continued to moderate and was having noticeable effects on other economies with large trade exposures to China.

Members noted that indicators for the established housing market in the first half of 2016 had pointed to an easing in conditions, including lower housing credit growth and an easing in housing price pressures. These developments were consistent with the tightening in lending standards towards the end of 2015 and decline in turnover in the housing market to low levels. This suggested that the risks associated with rising household sector leverage and rapid gains in housing prices had diminished.

The Reserve Bank of Australia (RBA) publishes minutes of its meetings with a two week lag. The text expands on the statement published two weeks earlier at the time of the announcement.

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.