Members of the Reserve Bank of Australia’s monetary policy board said that the monetary policy currently in place continues to be appropriate, minutes from the bank’s April 7 meeting revealed on Tuesday.
The members added that the Australian economy continues to grow slightly below trend, although the lower Australian dollar will give the economy a boost.
“Members’ overall assessment was that the outlook for global economic growth had not changed significantly over the past month and that it would be supported by stimulatory monetary policies and the fall in the price of oil since mid 2014,” the minutes said.
At the meeting, the RBA maintained its key benchmark lending rate at 2.25 percent for the second straight month as policymakers judged that it was appropriate to hold interest rates steady for the time being.
The bank last reduced the rate by a quarter point in February.
“Members also saw advantages in receiving more data, including on inflation, to assess whether or not the economy was on the previously forecast path and allowing more time for the economy to respond to the reduction in the cash rate earlier in the year,” the minutes said.
The bank expects the economy to operate with a degree of spare capacity for some time yet. With growth in labor costs subdued, it appears likely that inflation will remain consistent with the target over the next one to two years, even with a lower exchange rate, it said.
Lending to businesses strengthened recently and credit is recording moderate growth overall. The bank is working to assess and contain risks that may arise from the housing market amid low interest rates.
“The board judged that it was appropriate to hold interest rates steady for the time being, while accepting that further easing of policy may be appropriate over the period ahead to foster sustainable growth in demand and inflation consistent with the target. The board would continue to assess the case for such action at forthcoming meetings,” the minutes said.
Adding to the case for additional stimulus, RBA Governor Glenn Stevens said yesterday while visiting the United States that more rate cuts would have to be considered in the coming months.
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