AU: RBA Meeting Minutes

Mon Nov 20 18:30:00 CST 2017

The Reserve Bank of Australia has published the minutes of its November 7 meeting. Officials at that meeting kept the policy interest rate unchanged at a record low of 1.50 percent, again concluding that current policy settings were consistent with sustainable growth and achieving the inflation target "over time". This rate was last changed in August 2016 when it was cut by 25 basis points.

The minutes show that officials remain focussed on the extent to which ongoing improvements in the labour market are likely to boost wage growth, which remains subdued for now. Wage growth has fallen short of RBA's forecasts over the last twelve months and officials noted that there remains "considerable uncertainty" about when and how quickly wage pressures might emerge.

Officials also discussed upcoming changes to the weights used to calculate the consumer price index. These changes resulted in slight downward revisions to RBA inflation forecasts but officials noted that they did not change their assessment of how inflationary pressure are likely to evolve over the forecast period.

Details of these revised forecasts were published a few days after the RBA meeting in its quarterly Statement on Monetary Policy. Officials expect economic growth to pick up from 1.8 percent in the year ended June 2017 to 2.5 percent in the year ended December 2017 and 3.25 percent in the year ended December 2018. These estimates are within previous forecast ranges but are more precise than previously published. Officials have also made more precise forecasts for underlying inflation, and expect it to remain below the target range of 2.0 percent 3.0 percent throughout 2018, with headline CPI inflation also expected to increase only slightly over the next eighteen months.

Based on this updated assessment of the outlook, officials saw no need to change policy settings at the November meeting. Wages data for the three months to September, published after the meeting, showed that growth remains subdued and will likely reinforce officials view that policy needs to remain accommodative for the foreseeable future.

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.