Members of the Reserve Bank of Australia’s Monetary Policy Committee said that the Australian economy is expected to see continued gradual growth, minutes from the central bank’s April 3 meeting revealed on Tuesday.
The country’s inflation rate is also expected to pick up gradually, the bank said, while global economic conditions remain positive.
As a result, the bank said that the next move for its benchmark lending rate was likely to be an increase rather than another cut.
“Members agreed that it was more likely that the next move in the cash rate would be up, rather than down. As progress in lowering unemployment and having inflation return to the midpoint of the target was expected to be only gradual, members also agreed that there was not a strong case for a near-term adjustment in monetary policy,” the minutes said.
The bank noted that the low level of interest rates is continuing to support the Australian economy.
The RBA’s central forecast remains for faster growth in 2018. However, one continuing source of uncertainty is the outlook for household consumption, the bank said. Household income has been growing slowly and debt levels are high.
According to the RBA, inflation is likely to remain low for some time, but a gradual pick-up is expected as the economy strengthens. The central forecast is for CPI inflation to be slightly above 2 percent in 2018.
“Members noted that an appreciation of the Australian dollar would be expected to result in a slower pick-up in economic activity and inflation than forecast,” the minutes said.
At the meeting, the central bank kept its key interest rate unchanged at a record low 1.50 percent for the 20th straight month.
The bank had reduced the rate by 25-basis points each in August and May last year.
“Taking account of the available information, the board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time,” the minutes said.