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21 Oct 2014
RBA minutes: Low wage growth to maintain inflation target
FXStreet (Barcelona) - The RBA minutes revealed that the Board decided to leave the cash rate unchanged at 2.5 per cent. The AUD is steady on the release.
While they sighted growth in the global economy was continuing at a moderate pace and the AUD was depreciating somewhat related to a broad based appreciation in the greenback.
As expected, the domestic economy had grown moderately in the June quarter, following a strong March quarter result. The outcome was supported by strong growth in dwelling investment and steady consumption growth. Members noted that more timely indicators suggested that moderate growth overall had continued into the September quarter.
“Commodity prices, in particular iron ore prices, had declined over the past month. This was consistent with both the ongoing increase in iron ore supply and further weakening of the Chinese property market, which is an important source of demand for steel”.
“Global financial conditions remained very accommodative and the Australian dollar had depreciated somewhat, largely reflecting a broad-based appreciation of the US dollar”.
“The Board's judgement was that the current stance of monetary policy continued to be appropriate for fostering sustainable growth in demand and inflation outcomes consistent with the target over the period ahead”.
“Members considered that the most prudent course was likely to be a period of stability in interest rates”.
Continued accommodative monetary policy was expected to support demand and help growth to strengthen over time.
Members noted that the current setting of monetary policy was accommodative, with lending rates remaining very low and continuing to edge lower over recent months as competition to lend had increased
Faced with volatility in the labour force survey results, members based their assessment of the labour market on a range of indicators. These suggested that conditions in the labour market remained subdued but had stabilised somewhat this year.
While forward-looking indicators pointed to modest employment growth in the months ahead, there was a degree of spare capacity in the labour market and it would probably be some time before the unemployment rate declined consistently. Wage growth was expected to remain relatively slow in the near term, which should help to maintain inflation consistent with the target even with lower levels of the exchange rate.
While they sighted growth in the global economy was continuing at a moderate pace and the AUD was depreciating somewhat related to a broad based appreciation in the greenback.
As expected, the domestic economy had grown moderately in the June quarter, following a strong March quarter result. The outcome was supported by strong growth in dwelling investment and steady consumption growth. Members noted that more timely indicators suggested that moderate growth overall had continued into the September quarter.
“Commodity prices, in particular iron ore prices, had declined over the past month. This was consistent with both the ongoing increase in iron ore supply and further weakening of the Chinese property market, which is an important source of demand for steel”.
“Global financial conditions remained very accommodative and the Australian dollar had depreciated somewhat, largely reflecting a broad-based appreciation of the US dollar”.
“The Board's judgement was that the current stance of monetary policy continued to be appropriate for fostering sustainable growth in demand and inflation outcomes consistent with the target over the period ahead”.
“Members considered that the most prudent course was likely to be a period of stability in interest rates”.
Continued accommodative monetary policy was expected to support demand and help growth to strengthen over time.
Members noted that the current setting of monetary policy was accommodative, with lending rates remaining very low and continuing to edge lower over recent months as competition to lend had increased
Faced with volatility in the labour force survey results, members based their assessment of the labour market on a range of indicators. These suggested that conditions in the labour market remained subdued but had stabilised somewhat this year.
While forward-looking indicators pointed to modest employment growth in the months ahead, there was a degree of spare capacity in the labour market and it would probably be some time before the unemployment rate declined consistently. Wage growth was expected to remain relatively slow in the near term, which should help to maintain inflation consistent with the target even with lower levels of the exchange rate.