RBA minutes: Unchanged policy consistent with CPI returning to its price-goal
The minutes of the June RBA meeting when interest rates were held unchanged at 1.75% have been released.
As the RBA minutes notes: "Following the reduction in the cash rate in May, the Board judged that leaving the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and inflation returning to target over time.
On the AUD, the RBA observes: " The Australian dollar had depreciated noticeably since the previous meeting, following the reduction in the cash rate and the publication of the Bank's revised inflation outlook in the MayStatement on Monetary Policy."
"An increase in expectations of a tightening in US monetary policy had also played a role, as had the decline in commodity prices, which was consistent with expectations that the rally in bulk commodity prices in early 2016 would unwind at some point", RBA added.
Key headlines - Reuters
- Appreciation of AUD could complicate adjustment of economy to the lower terms of trade
- Board judged leaving rates steady at June 7 meeting was consistent with sustainable growth
- Low interest rates and weaker AUD since 2013 helped support above potential growth in Q1
- Q2 growth to be more moderate, but year-ended growth should stay slightly above potential
- Growth in household disposable income had been stronger than measures of income growth for overall economy
- Employment growth appeared to have lost some momentum, this was largely as expected
- Labour costs pressure subdued in Q1, but a few measures were slightly more positive
- Saw inflation staying low for some time, inflation expectations had remained below average
- House prices had begun to rise again recently, but extent of rises to be affected by considerable supply of apartments
- Noted uncertainty about UK referendum on EU membership had resulted in increased sterling volatility
- Growth in Australia's major trading partners moderated in Q1 as largely expected