RBA Minutes: No Concerns over Growth or Inflation

Australia’s central bank said the pace of economic growth should pick up gradually in the next few years without inflation being a problem, a benign mix that might provide it with the scope to cut interest rates further if needed. In minutes of its Feb. 2 meeting, where the Reserve Bank of Australia (RBA) kept the cash rate at a record low 2.0%, the central bank reiterated that very low rates and a weaker local dollar were already underpinning growth.

“Based on the available data and the forecasts for economic activity and inflation, members judged that it was appropriate to leave the cash rate unchanged at an accommodative setting,” the central bank said. “There continued to be evidence that very low interest rates were supporting growth in household consumption and dwelling investment and that the depreciation of the exchange rate was boosting demand for domestic production as it adjusted to the evolving economic outlook.”

There was nothing in the minutes to suggest that the central bank has shifted its conditional easing bias. “The Board noted that the outlook for continued low inflation may provide scope for easier monetary policy, should that be appropriate to lend further support to demand.”