RBA Minutes: Current Monetary Policy Remains Appropriate
21 April 2015 - 12:25PM
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Members of the Reserve Bank of Australia's monetary policy board
said that the monetary policy currently in place continues to be
appropriate, minutes from the bank's April 7 meeting revealed on
Tuesday.
The members added that the Australian economy continues to grow
slightly below trend, although the lower Australian dollar will
give the economy a boost.
"Members' overall assessment was that the outlook for global
economic growth had not changed significantly over the past month
and that it would be supported by stimulatory monetary policies and
the fall in the price of oil since mid 2014," the minutes said.
At the meeting, the RBA maintained its key benchmark lending
rate at 2.25 percent for the second straight month as policymakers
judged that it was appropriate to hold interest rates steady for
the time being.
The bank last reduced the rate by a quarter point in
February.
"Members also saw advantages in receiving more data, including
on inflation, to assess whether or not the economy was on the
previously forecast path and allowing more time for the economy to
respond to the reduction in the cash rate earlier in the year," the
minutes said.
The bank expects the economy to operate with a degree of spare
capacity for some time yet. With growth in labor costs subdued, it
appears likely that inflation will remain consistent with the
target over the next one to two years, even with a lower exchange
rate, it said.
Lending to businesses strengthened recently and credit is
recording moderate growth overall. The bank is working to assess
and contain risks that may arise from the housing market amid low
interest rates.
"The board judged that it was appropriate to hold interest rates
steady for the time being, while accepting that further easing of
policy may be appropriate over the period ahead to foster
sustainable growth in demand and inflation consistent with the
target. The board would continue to assess the case for such action
at forthcoming meetings," the minutes said.
Adding to the case for additional stimulus, RBA Governor Glenn
Stevens said yesterday while visiting the United States that more
rate cuts would have to be considered in the coming months.