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RBA minutes: no strong case for a near-term adjustment in monetary policy

The Reserve Bank of Australia (RBA) board agreed that the next move in the cash rate is more likely to be an increase than a decrease but also believed there is no strong case for a near-term adjustment in monetary policy, minutes of the December 2018 meeting released soon before press time revealed. 

Key points (Source: RBA)

  • Expected Q3 GDP growth to be above 3 pct for the year (vs actual 2.8 pct)
  • Expected GDP growth to run above potential this year and next
  • Trade-weighted AUD remained within a range of recent years
  • Recent sharp fall in oil prices likely to curb headline inflation globally
  • The steady policy allowed RBA to be a source of stability and confidence
  • Sluggish household incomes, high debt, and falling home prices "posed downside risks"
  • Leading indicators pointed to above average jobs growth for the next couple of quarters
  • Further fall in the unemployment rate likely
  • Banks had slowed lending for housing investment and to small business
  • There had been a "generalized tightening of credit availability"
  • Noted a pick up in business lending by major banks to large businesses
  • Board noted difficult to gauge underlying growth in the Chinese economy
  • Growth had slowed in a number of economies globally, in part due to trade tensions


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