RBA Rate Cut a Close Call, Highlights Board Meeting Minutes

RBA Rate Cut a Close Call, Highlights Board Meeting Minutes

17 May 2016, 07:51
Roberto Jacobs
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RBA Rate Cut a Close Call, Highlights Board Meeting Minutes

The Reserve Bank of Australia minutes of the Board meeting highlighted that the decision of the central bank to ease interest rates is a close call. Further, insights have been gained behind the decision to lower the official interest rates by 25 bps to 1.75 pct.

Members of the committee discussed the merits of adjusting policy at this meeting, awaiting further information before acting. The fact that the RBA considered waiting to lower rates suggests that the apex bank was not thinking of successive rate cuts at the time of the May meeting.

Further, commenting over the economy, the minutes of the meeting highlighted that the outlook for economic activity and unemployment has been slightly changed. While the close decision in May suggests a June rate cut is less likely, it does not rule out a rate cut further down the track, particularly if further evidence of very low inflation is received, reports confirmed.

While the commodity country seems to recover in the domestic non-mining sectors, the weak inflation and softer outlook for the economy suggests another close rate cut down the line.

"We are penciling August as the most likely timing for one to occur," St George Economics said in a research note.

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