Highlights
The Reserve Bank of Australia has published the minutes of its May 7 meeting. Officials at that meeting left their main policy rate, the cash rate, unchanged at 4.35 percent for the fourth consecutive meeting after they increased it by 25 basis points last November.
Consistent with the statement accompanying the decision, the minutes note that recent CPI data showed a further moderation in underlying price pressures, but officials also expressed concerns that"the pace of disinflation had slowed and the recent inflation data were stronger than had been expected". They noted that inflation was still projected to return to their target range of two percent to three percent in the same timeframe as they expected previously. But they also noted that the trajectory of policy rates priced in by markets that underlies their forecasts had increased since their previous meeting. In particular, markets no longer imply a reduction in policy rates this year.
The minutes show that after not considering an increase in policy rates at their last meeting for the first time in nearly two years, officials did again consider a rate increase at this meeting. Officials identified a number of factors that could warrant such a move but concluded that those factors are not yet present. Nevertheless, they also concluded that"information since the previous meeting had increased the risks of inflation staying above target for longer."
Reflecting this assessment, officials stressed that"it was difficult either to rule in or rule out future changes in the cash rate target" and reiterated"their resolve to do what is necessary to return inflation to target". This suggests officials see little prospect of easing policy in the foreseeable future and stand ready to tighten further if necessary.
Consistent with the statement accompanying the decision, the minutes note that recent CPI data showed a further moderation in underlying price pressures, but officials also expressed concerns that"the pace of disinflation had slowed and the recent inflation data were stronger than had been expected". They noted that inflation was still projected to return to their target range of two percent to three percent in the same timeframe as they expected previously. But they also noted that the trajectory of policy rates priced in by markets that underlies their forecasts had increased since their previous meeting. In particular, markets no longer imply a reduction in policy rates this year.
The minutes show that after not considering an increase in policy rates at their last meeting for the first time in nearly two years, officials did again consider a rate increase at this meeting. Officials identified a number of factors that could warrant such a move but concluded that those factors are not yet present. Nevertheless, they also concluded that"information since the previous meeting had increased the risks of inflation staying above target for longer."
Reflecting this assessment, officials stressed that"it was difficult either to rule in or rule out future changes in the cash rate target" and reiterated"their resolve to do what is necessary to return inflation to target". This suggests officials see little prospect of easing policy in the foreseeable future and stand ready to tighten further if necessary.
Definition
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.
Description
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.
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.
