Housing market a ray of light in RBA minutes
(17 October 2012 – Australia) Notes from the Reserve Bank of Australia (RBA)’s October meeting showed worries on the reduction in investment by Australian resource companies contributed to the decision to cut rates by 25 basis points.
In the minutes, the RBA Board was concerned about weaker commodity prices and the noticeable decline in the appetite for spending in the mining sector.
‘‘Notwithstanding the expectation of some recovery in prices of bulk commodities over the coming quarters, it seemed likely that mining investment would peak a little earlier and at a somewhat lower level than had previously been forecast,’’ the minutes said.
The RBA in October cut its interest rate by a quarter of a percentage point, to 3.25 percent, bringing the cash rate to its lowest level since October 2009.
The RBA minutes also said economic growth in the coming year could be weaker than had previously forecast.
However, the board was hopeful about some of the non-mining sectors of the economy.
‘‘Dwelling investment remained at a low level in the June quarter, although there were signs of improved sentiment in the housing market more recently,’’ the RBA said.
‘‘The improvement in sentiment in the housing market had been accompanied by an increase in dwelling prices in recent months.
‘‘Household credit had been growing a little more slowly than household incomes, with members discussing the desire to pay down their debt ahead of schedule.’’
‘‘Notwithstanding the expectation of some recovery in prices of bulk commodities over the coming quarters, it seemed likely that mining investment would peak a little earlier and at a somewhat lower level than had previously been forecast,’’ the minutes said.
The RBA in October cut its interest rate by a quarter of a percentage point, to 3.25 percent, bringing the cash rate to its lowest level since October 2009.
The RBA minutes also said economic growth in the coming year could be weaker than had previously forecast.
However, the board was hopeful about some of the non-mining sectors of the economy.
‘‘Dwelling investment remained at a low level in the June quarter, although there were signs of improved sentiment in the housing market more recently,’’ the RBA said.
‘‘The improvement in sentiment in the housing market had been accompanied by an increase in dwelling prices in recent months.
‘‘Household credit had been growing a little more slowly than household incomes, with members discussing the desire to pay down their debt ahead of schedule.’’
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