AU: RBA Meeting Minutes

September 19, 2016 08:30 CDT

The Reserve Bank of Australia has published the minutes of its September 6 meeting. Officials at that meeting kept the policy interest rate unchanged at a record low of 1.5 percent after cutting this rate by 25 basis points at meetings held in May and August. The statement released after the September 6 meeting did not provide an explicit bias about the future direction of policy rates.

The minutes contained relatively little discussion of the inflation outlook. Officials noted that global commodity prices had increased in recent months, providing a boost to Australia's terms of trade, and also pointed to ongoing weakness in wage growth, particularly in industries and states exposed to the mining sector.

Officials also discussed regional differences in growth and employment conditions associated with an ongoing decline in mining investment, with this impact expected to persist. They also cited data indicating that conditions in the housing market had continued to weaken from those seen in 2015. Nevertheless, officials expected GDP data scheduled for release the day after their meeting would show overall growth close to their estimates of Australia's potential growth rate.

In general, officials argued that the outlook for both the domestic and global economy was broadly in line with their most recent forecasts published in August. Given that officials had already cut policy rates in May and August, this lack of any news to change their view of the outlook led officials to conclude that no change in the stance of monetary policy was required. However, they also reiterated that necessary adjustments in the domestic economy had been supported by a weaker currency but would be complicated by any appreciation in the exchange rate.

The minutes suggest that the RBA is relatively comfortable for now with current policy settings and anticipates that rate cuts delivered earlier this year will help to support domestic activity and push inflation back towards its target. However, it is also clear that the currency remains stronger than officials would like it to be, and that ongoing uncertainty about the future direction of policy in major global economies also poses some risks to the outlook. This suggests that the RBA remains open to further policy easing in the months ahead

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.