Highlights
The Reserve Bank of Australia has published the minutes of its June 18 meeting. Officials at that meeting left their main policy rate, the cash rate, unchanged at 4.35 percent for the fifth 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 inflation remained above the target range of two percent to three percent and had been"a little higher than expected in recent months". Ahead of the meeting, the monthly measure of headline core CPI inflation had risen from 3.5 percent in March to 3.6 percent in April, but data released since the meeting showed a further increase to 4.0 percent in May, its highest level since November.
Officials acknowledged at the meeting that recent inflation data"had increased the risk that sustainable progress towards the inflation target may be slower than forecast" and that other information had"indicated a need to remain alert to upside risks to inflation". Officials also noted, however, that GDP growth in the three months to March had been weaker than they had expected and that the labour market was continuing to ease gradually.
Reflecting these factors, the minutes show that officials again considered increasing policy rates at this meeting in addition to leaving them on hold. They judged that a rate hike would be appropriate if they were convinced that current policy settings were not sufficiently restrictive to return inflation to target"within a reasonable timeframe", but concluded that this is not yet the case. Officials for now retain their assessment that inflation will return to target by 2026. The minutes also show, however, that they remain concerned about the outlook for consumption growth and household finances.
Although officials are clearly wary of both risks to the inflation and the growth outlook, they again stressed that inflation remains their"highest priority". Officials again advised that"it was difficult either to rule in or rule out future changes" in policy rates but 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 inflation remained above the target range of two percent to three percent and had been"a little higher than expected in recent months". Ahead of the meeting, the monthly measure of headline core CPI inflation had risen from 3.5 percent in March to 3.6 percent in April, but data released since the meeting showed a further increase to 4.0 percent in May, its highest level since November.
Officials acknowledged at the meeting that recent inflation data"had increased the risk that sustainable progress towards the inflation target may be slower than forecast" and that other information had"indicated a need to remain alert to upside risks to inflation". Officials also noted, however, that GDP growth in the three months to March had been weaker than they had expected and that the labour market was continuing to ease gradually.
Reflecting these factors, the minutes show that officials again considered increasing policy rates at this meeting in addition to leaving them on hold. They judged that a rate hike would be appropriate if they were convinced that current policy settings were not sufficiently restrictive to return inflation to target"within a reasonable timeframe", but concluded that this is not yet the case. Officials for now retain their assessment that inflation will return to target by 2026. The minutes also show, however, that they remain concerned about the outlook for consumption growth and household finances.
Although officials are clearly wary of both risks to the inflation and the growth outlook, they again stressed that inflation remains their"highest priority". Officials again advised that"it was difficult either to rule in or rule out future changes" in policy rates but 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.
