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19 Mar 2013
RBA minutes shows neutral stance: accommodative policy appropriate
FXstreet.com (Barcelona) - The RBA March policy meeting minutes turned out to be a non-event, with the statement pretty much repeating past ones. On the economy, the RBA sees it is responding well to low rates, while insisting that there is scope to cut further only if needed; also, they remind that the Aussie dollar is too high.
Other headlines from the minutes:
- Indicators suggested that growth of the Chinese economy had stabilised at a sustainable pace, although activity data were limited over the past month and the available data were difficult to interpret owing to the Spring Festival holiday
- Overall, the staff's assessment remained that GDP growth would be a little below trend this year, with a pick-up after that.
- While mining investment was reported to have grown further in the December quarter, it still appeared that mining investment as a share of GDP was approaching its peak and mining firms remained focused on containing costs.
- Forward-looking indicators such as building approvals pointed to further growth in construction in the months ahead.
- Indicators of consumption had been mixed but, overall, growth appeared to have been only modest in the December quarter.
- Members noted that conditions in the labour market remained subdued (the latest data may change their mind)
- Risks to global financial stability had eased over the past six months as global financial market sentiment had improved significantly.
- Overall, members noted that the improvement in sentiment had led to more favourable conditions in funding markets in the major economies (and Australia)
- The Board considered it appropriate that the stance of monetary policy should be accommodative. After six cash rate reductions since late 2011, lending rates were close to the historically low levels of 2009 and clearly below normal levels.
- Interest-sensitive parts of the economy continued to show signs of responding to these low rates and it was likely that this still had further to run, though the exchange rate remained high. With inflation likely to remain around the middle of the inflation target, members judged that there would be scope to cut the cash rate further to support demand, should that be necessary.
Other headlines from the minutes:
- Indicators suggested that growth of the Chinese economy had stabilised at a sustainable pace, although activity data were limited over the past month and the available data were difficult to interpret owing to the Spring Festival holiday
- Overall, the staff's assessment remained that GDP growth would be a little below trend this year, with a pick-up after that.
- While mining investment was reported to have grown further in the December quarter, it still appeared that mining investment as a share of GDP was approaching its peak and mining firms remained focused on containing costs.
- Forward-looking indicators such as building approvals pointed to further growth in construction in the months ahead.
- Indicators of consumption had been mixed but, overall, growth appeared to have been only modest in the December quarter.
- Members noted that conditions in the labour market remained subdued (the latest data may change their mind)
- Risks to global financial stability had eased over the past six months as global financial market sentiment had improved significantly.
- Overall, members noted that the improvement in sentiment had led to more favourable conditions in funding markets in the major economies (and Australia)
- The Board considered it appropriate that the stance of monetary policy should be accommodative. After six cash rate reductions since late 2011, lending rates were close to the historically low levels of 2009 and clearly below normal levels.
- Interest-sensitive parts of the economy continued to show signs of responding to these low rates and it was likely that this still had further to run, though the exchange rate remained high. With inflation likely to remain around the middle of the inflation target, members judged that there would be scope to cut the cash rate further to support demand, should that be necessary.