AU: RBA Meeting Minutes

November 14, 2016 06:30 CST

The Reserve Bank of Australia has published the minutes of its November 1 meeting. Officials at that meeting kept the policy interest rate unchanged at a record low of 1.50 percent, concluding that rate cuts made earlier in the year were, at that stage, consistent with sustainable growth and achieving the inflation target "over time".

Since the November 1 meeting the RBA has published an updated assessment of economic conditions and prospects in its quarterly Statement on Monetary Policy. Officials noted that domestic activity had appeared to have moderated in recent months but made little change to their GDP forecasts, still projecting growth of between 2.5 and 3.5 percent over 2017 and 2018. Officials continue to expect an ongoing slowdown in mining investment to be offset by stronger conditions in other parts of the economy.

The Statement also noted that recent inflation data for the three months to September were in line with expectations, with both headline and underlying inflation subdued and relatively steady. Officials made no material change to their assessment of the outlook for consumer prices, with both measures of inflation forecast to increase from around 1.5 percent at the end of 2016 to between 1.5 percent and 2.5 percent over 2017 and 2018.

Not surprisingly, the discussion in the meeting minutes is close to the assessment published in the Statement a few days later, with most members of the policy committee appearing to be broadly supportive of the consensus view. members noted some uncertainty about recent data relating to the areas such as household consumption, the terms of trade, the labour market and the housing market, and again pointed out that any significant appreciation of the domestic currency from current levels would present problems. However, members agreed that these uncertainties were not enough to prompt a significant change in the outlook compared with August when the previous set of forecasts had been published. Members also agreed that risks around the inflation forecast were "broadly balanced". As a result, they concluded that keeping policy rates unchanged would be appropriate.

RBA Governor Philip Lowe is scheduled to speak later today.

Although inflation remains for now below the RBA's target range of between 2.0 percent and 3.0 percent, officials have made it clear that they expect it to increase back towards and within this range over the forecast period and that they have a "flexible" and patient approach towards meeting their inflation target. This suggests that they feel little pressure to cut policy rates again at the moment and that there would need to be a significant change in the outlook for them to consider that such a move is required in coming months. The RBA's next scheduled policy meeting will take place in early February next year.

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.