AU: RBA Meeting Minutes

Mon Dec 18 18:30:00 CST 2017

The Reserve Bank of Australia has published the minutes of its December 5 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.

December's meeting took place the day before the release of data showing that year-on-year growth in Australia's economy picked up from 1.9 percent in the three months to June to 2.8 percent in the three months to September. Officials were confident that the data would show that economic growth had risen to around the economy's potential growth rate and repeated their view that growth would strengthen further over the forecast period. Weak household consumption, however, was again cited as a risk to this outlook.

The minutes show that the labour market remains a key focus for officials. Despite ongoing gains in employment and a drop in the unemployment rate, officials noted that wage growth fell short of expectations in the three months to September and appears to have stabilised at a low rate. Nevertheless, they continued to expect that further improvement in the labour market will eventually result in stronger wage pressures and a gradual pick-up in headline inflation.

The minutes also note that housing market conditions had eased, particularly in Australia largest city, Sydney, with data released subsequently also supporting this assessment. Officials argued that this has been accompanied by a reduction in risks associated with household balance sheets, perhaps suggesting that concerns about household indebtedness would have less impact on their policy decisions going forward.

Today's minutes do little to suggest there is any appetite among officials for a change in policy settings in upcoming meetings. The RBA's next policy meeting is scheduled for early February.

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.