Members of the Reserve Bank of Australia’s monetary policy board said that the global economy is experiencing acceptable overall improvement, minutes from the board’s March 6 meeting revealed on Tuesday.
They added that the domestic economy could be hampered by an appreciating exchange rate, the minutes said.
“On a trade-weighted basis, the Australian dollar remained within its range of the preceding two years but that an appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than forecast,” the minutes said.
The members added that consumer prices are expected to continue a slow climb into the central bank’s target range of between 2 and 4 percent.
“The low level of interest rates over 2017 had played a role in reducing the unemployment rate and bringing inflation closer to target. Further progress on these goals was expected over the period ahead, but this process was likely to be gradual,” the minutes said.
At the meeting, the RBA maintained its benchmark lending rate at the record low 1.50 percent.
The bank noted that the low level of interest rates is continuing to support the Australian economy.
Market volatility has increased from the very low levels of last year. A number of central banks have withdrawn some monetary stimulus as condition improved in the global economy, the bank observed.
The bank said the central forecast is for the Australian economy to grow faster in 2018 than it did in 2017. Last month, the bank had forecast growth to average a bit above 3 percent.
“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.