RBA Minutes Show Little Taste for a New Rate Cut

Australia’s central bank said a subdued inflation outlook meant there was scope to ease monetary policy further if needed, but appeared to set a high bar for such a move as interest rates were already “very low”.

In minutes of its Nov. 3 policy review, the Reserve Bank of Australia (RBA) said a weaker currency and strong employment growth in the services sector suggested that the “prospects for an improvement in economic conditions had firmed a little over recent months.”

“Taking the above information into consideration, members decided that leaving the cash rate unchanged at this meeting was appropriate,” the minutes said. The cash rate has been at a record low of 2 percent since the last cut in May.

“They judged that the inflation outlook may afford some scope for further easing of monetary policy, should that be appropriate to lend support to demand.”

The RBA said it still expects the overall economy to strengthen gradually over the next two years as the drag on growth from falling mining investment waned and activity in other sectors picked up.

“However, members recognized that there was still evidence of spare capacity, including the relatively high unemployment rate, low wage growth and the lower-than-expected inflation outcome in the September quarter,” the central bank said.

“In these circumstances, members judged that monetary policy needed to be accommodative.”


Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.