April minutes show RBA optimism
(17 April 2013 – Australia) The Reserve Bank of Australia (RBA) is ready to push interest rates lower if that’s what the economy needs, but at present there is a very good chance the economy might be able to get by without intervention, according to the minutes from its 2 April board meeting.
"The outlook for inflation, as currently assessed, would provide scope for further easing should that be necessary to support demand," the RBA said in the minutes.
The background to that "leave-the-door-open" stance is an economy that grew below its normal pace through most of 2012 and is expected by the RBA to do that again in 2013 before return to "trend".
"Overall, recent data suggested that interest-sensitive parts of the economy were responding to the historically low levels of rates and it remained likely that this had further to run," the RBA said.
"At the same time, the factors weighing on the economy - including the high exchange rate, the waning growth of mining investment, and fiscal consolidation - were likely to persist."
"The key issues were what the balance of these factors would turn out to be."
The RBA has kept the cash rate steady since its last cut to 3 percent in December, and by the wording of its announcements since, the RBA has made it clear that it has strong hopes that the economy can "rebalance", as some economists put it, without further monetary stimulus.
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