Australia weathering global adversity - RBA
(21 August 2012 – Australia) The Reserve Bank of Australia (RBA)’s decision to extend the interest-rate pause for the second month in a row was largely due to its valuation of consistent inflation on the back of domestic economic growth.
"With inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the board judged the stance of monetary policy remained appropriate," according to minutes released on Tuesday explaining why the overnight cash rate target was held at 3.5 percent.
Stronger household spending, a pipeline of capital spending and higher home prices signalled the economy was weathering a global slowdown.
"The global economic environment remained fragile, with the uncertainty emanating from the euro area affecting financial markets and potentially delaying spending by firms and households," policy makers said in the minutes.
"The exchange rate had remained at a relatively high level notwithstanding the weakening in the global outlook and decline in commodity prices."
"There were indications that consumer spending had retained some momentum in the June quarter, even though consumer spending remained at subdued levels," the minutes showed.
"Earlier falls in interest rates and rising rental yields were likely to have increased the attractiveness of housing investment."
Future meetings would likely be dominated with outlook of the eurozone, China – which is seen to be stabilising, and domestically on housing and resources.
Stronger household spending, a pipeline of capital spending and higher home prices signalled the economy was weathering a global slowdown.
"The global economic environment remained fragile, with the uncertainty emanating from the euro area affecting financial markets and potentially delaying spending by firms and households," policy makers said in the minutes.
"The exchange rate had remained at a relatively high level notwithstanding the weakening in the global outlook and decline in commodity prices."
"There were indications that consumer spending had retained some momentum in the June quarter, even though consumer spending remained at subdued levels," the minutes showed.
"Earlier falls in interest rates and rising rental yields were likely to have increased the attractiveness of housing investment."
Future meetings would likely be dominated with outlook of the eurozone, China – which is seen to be stabilising, and domestically on housing and resources.
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