The Reserve Bank of Australia (RBA) board agreed that the next move in the cash rate is more likely to be an increase than a decrease but also believed there is no strong case for a near-term adjustment in monetary policy, minutes of the December 2018 meeting released soon before press time revealed.
Key points (Source: RBA)
- Expected Q3 GDP growth to be above 3 pct for the year (vs actual 2.8 pct)
- Expected GDP growth to run above potential this year and next
- The Australian dollar remained within its range of recent years on a trade-weighted basis.
- Australia's terms of trade had increased over recent years, which had helped to boost national income.
- Members noted that the significant fall in oil prices was likely to reduce global headline inflation over the following year or so, should it be sustained.
- The steady policy allowed RBA to be a source of stability and confidence
- Sluggish household incomes, high debt, and falling home prices "posed downside risks"
- Leading indicators pointed to above average jobs growth for the next couple of quarters
- Further fall in the unemployment rate likely
- Banks had slowed lending for housing investment and to small business
- There had been a "generalized tightening of credit availability"
- Noted a pick up in business lending by major banks to large businesses
- Board noted difficult to gauge underlying growth in the Chinese economy
- Growth had slowed in a number of economies globally, in part due to trade tensions
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