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2007
Reserve Bank Minutes show "wait and see" attitude
Tuesday June 16, 2009
In a release today, the minutes from the Reserve Bank of Australia's latest meeting on June 2nd 2009 have shown that the board believes that the global economy is indeed recovering and showing signs of stabilizing, thereby eliminating the need for other interest rates cuts. After the June 2nd meeting, the Reserve Bank of Australia let the overnight cash rate remain steady at 3 per cent for the second month consecutively, the lowest the rate has been in 49 years.
Minutes released from the meeting show that the board believed that due to recent developments both nationally and overseas that the current economic climate is not as dire as once feared with signs of stabilization globally.
Such developments listed included an increase in industrial production in China and greater Asia, in addition to indicators within the domestic economy improving.
The industrial production levels in Asia and China is welcomed by the Australian economy as China is Australia's second largest export market. The Reserve Bank of Australia noted in its meeting minutes that there have been significant increases in fixed capital investment from the public sector with strong credit growth in the Asian market. However, the board meeting minutes also outlined that indicators had not improved on the Asian value of exports which has declined 25 per cent over the past year.
Within Australia's domestic economy the board noted improvements from the low interest rates and government support including the Federal Government's stimulus package plan which boosted the local economy and consumer spending. Domestic indicators were noted to have been less drastic than in previous quarters and even other countries' economies which the Reserve Bank stated gave it leniency when it comes to its monetary policy, meaning that rates did not need to be cut further during the June 2nd meeting. This follows the Reserve Bank having cut 4.25 percentage points off the cash rate since September 2008 and April 2009.
Overall the Reserve Bank of Australia's meeting minutes showed that some members of the board are somewhat optimistic in terms of the recovery of the domestic economy after assessing recent data that indicates stringer growth for this quarter. Although the board also concluded that the full effects of measures taken over recent months will not be truly felt for some time.
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