15 Oct 2013
RBA minutes confirms neutral tone
FXstreet.com (Barcelona) - The RBA has published the minutes of the monetary policy meeting from last Oct 1, in which the decision was unanimous to leave the cash rate unchanged at 2.25% record low. Today's tone confirmed a neutral stance.
Minutes statement (key quotes)
"In China, data released in the past month had generally been a bit stronger than earlier in the year."
"Members noted that, in Japan, data released in the past month had been generally positive."
"In the euro area, economic conditions had improved a little in recent months, although the labour market remained very weak."
"The transition from the investment phase to the production phase of the resources boom had become more evident over the course of the past year."
"Export volumes had increased, driven by higher iron ore and rural exports, and strong growth in resources exports was expected to continue in coming quarters with more mining projects scheduled to come on line."
"Household consumption growth had been below average in the June quarter, which was consistent with the slower growth of household income that had accompanied softer conditions in the labour market."
"The labour market had softened further in recent months. The unemployment rate had increased to 5.8 per cent, the participation rate had declined and the level of employment was little changed from earlier in the year. Members noted that hours worked had increased. Although the hours worked data are volatile, possible explanations for the increase included changes in sectoral employment shares, increased hours for existing staff as firms attempted to contain labour costs or reluctance of firms to take on new staff. Forward-looking indicators of labour demand remained soft and the Bank's liaison suggested that employment intentions had been subdued in recent months, most notably in mining and mining-related sectors."
"Members noted that the Australian dollar was still around 10 per cent below its peak in April. Current market pricing implied a very low likelihood of a near-term reduction in the cash rate."
"In the United States, market reaction to the decision by the Federal Reserve not to scale back the rate of its asset purchases, together with the more positive Chinese data, saw the Australian dollar appreciate over recent weeks, although on a trade-weighted basis the exchange rate remained around 10 per cent lower than in April."
"Non-mining investment had remained subdued, as businesses had been reluctant to take on new risks, and mining investment had turned down. Growth of household consumption had been below average, consistent with subdued conditions in the labour market and softer growth of wages. Consumer confidence was above average levels and business confidence had increased, although it remained to be seen if this would be sustained."
"The effect of low interest rates was evident across a range of indicators and had further to run. House prices and turnover had increased and leading indicators pointed to a pick-up in dwelling investment over the period ahead. While credit growth remained moderate, there were signs of an increased appetite for borrowing, most notably among investors."
"The Board's judgement was that, given the substantial degree of policy stimulus that had been imparted, it would be prudent to leave the cash rate at the existing low level while continuing to gauge the effects. Members agreed that the Bank should again neither close off the possibility of reducing rates further nor signal an imminent intention to reduce them."
Minutes statement (key quotes)
"In China, data released in the past month had generally been a bit stronger than earlier in the year."
"Members noted that, in Japan, data released in the past month had been generally positive."
"In the euro area, economic conditions had improved a little in recent months, although the labour market remained very weak."
"The transition from the investment phase to the production phase of the resources boom had become more evident over the course of the past year."
"Export volumes had increased, driven by higher iron ore and rural exports, and strong growth in resources exports was expected to continue in coming quarters with more mining projects scheduled to come on line."
"Household consumption growth had been below average in the June quarter, which was consistent with the slower growth of household income that had accompanied softer conditions in the labour market."
"The labour market had softened further in recent months. The unemployment rate had increased to 5.8 per cent, the participation rate had declined and the level of employment was little changed from earlier in the year. Members noted that hours worked had increased. Although the hours worked data are volatile, possible explanations for the increase included changes in sectoral employment shares, increased hours for existing staff as firms attempted to contain labour costs or reluctance of firms to take on new staff. Forward-looking indicators of labour demand remained soft and the Bank's liaison suggested that employment intentions had been subdued in recent months, most notably in mining and mining-related sectors."
"Members noted that the Australian dollar was still around 10 per cent below its peak in April. Current market pricing implied a very low likelihood of a near-term reduction in the cash rate."
"In the United States, market reaction to the decision by the Federal Reserve not to scale back the rate of its asset purchases, together with the more positive Chinese data, saw the Australian dollar appreciate over recent weeks, although on a trade-weighted basis the exchange rate remained around 10 per cent lower than in April."
"Non-mining investment had remained subdued, as businesses had been reluctant to take on new risks, and mining investment had turned down. Growth of household consumption had been below average, consistent with subdued conditions in the labour market and softer growth of wages. Consumer confidence was above average levels and business confidence had increased, although it remained to be seen if this would be sustained."
"The effect of low interest rates was evident across a range of indicators and had further to run. House prices and turnover had increased and leading indicators pointed to a pick-up in dwelling investment over the period ahead. While credit growth remained moderate, there were signs of an increased appetite for borrowing, most notably among investors."
"The Board's judgement was that, given the substantial degree of policy stimulus that had been imparted, it would be prudent to leave the cash rate at the existing low level while continuing to gauge the effects. Members agreed that the Bank should again neither close off the possibility of reducing rates further nor signal an imminent intention to reduce them."