Tuesday 19th July 2016 - 1:10 pm

RBA”waiting”

by Alan Thornhill

The Reserve Bank is waiting for fresh information, before it decides whether to cut interest rates again, as it did in May.

 

The bank clarified its position in the minutes from its July 5 Board meeting which it released today.

 

It said growth in Australia’s major trading partners appeared to have remained slightly below average over recent months.

 

This was  in line with earlier forecasts.

 

“ GDP growth in China appeared to have eased further, which was continuing to affect economic conditions throughout the Asian region,” the bank added.

 

It said, too,  that:  “monetary policy remained very accomodative across the major economies.”

 

That was expected to remain so given that inflation was below most central banks’ targets.

 

However, the bank added, this was despite improvements in labour markets leading to full employment in several large advanced economies.

 

It said: “ GDP growth in China appeared to have eased further, which was continuing to affect economic conditions throughout the Asian region.

 

“Monetary policy remained very accommodative across the major economies.

 

And it is expected to remain so given that inflation was below most central banks’ targets, despite improvements in labour markets leading to full employment in several large advanced economies, the bank added

 

It said:  “the United Kingdom’s vote to leave the European Union had led to considerable financial market volatility, which had since settled.

 

“Financial markets had functioned effectively throughout the episode and borrowing costs for high-quality borrowers remained low.
Any effects of the referendum outcome on UK and global economic activity remained to be seen.

 

In any event, the referendum result implied a period of uncertainty about the outlook for the United Kingdom and the European Union. In the absence of significant financial dislocation, the staff’s central case was that this uncertainty was expected to have only a modest adverse effect on global economic activity.

 

 

Commodity prices had generally increased since the previous meeting. At the time of the present meeting, the Australian dollar (in trade-weighted terms) was around the levels assumed in the forecasts at the time of the May Statement on Monetary Policy

 

 

 

 

 


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