Members of the Reserve Bank of Australia’s Monetary Policy Board said that the country’s economy was continuing to expand as expected, minutes from the bank’s February 6 meeting revealed on Tuesday.
The economic data, both in Australia and among its major trading partners, has been broadly positive, the bank added.
The inflation outlook remains steady for the near term, although the bank noted that an appreciating exchange rate could slow CPI growth.
“In considering the stance of monetary policy, members noted that the flow of data since the previous meeting, for both the international economy and Australia, had been generally positive. Conditions in the global economy had continued to improve,” the minutes said.
At the meeting, the RBA maintained its benchmark cash rate at 1.50 percent. The bank had reduced the rate by 25-basis points each in August and May last year.
Taking account of the available information, the RBA 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 bank hinted that interest rates are unlikely to rise anytime soon. The low level of interest rates is continuing to support the Australian economy, RBA said.
“Financial market pricing suggested that market participants expected the cash rate to remain unchanged during 2018, but had priced in a 25 basis point increase by early 2019,” the minutes said.
Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual, the bank observed.
The RBA pointed out the outlook for household consumption as one continuing source of uncertainty. Household incomes are growing slowly and debt levels are high.
“Domestically, business conditions had improved over 2017 but growth in consumption had continued at a relatively modest pace, constrained by low household income growth despite stronger-than-expected employment growth and a decline in the unemployment rate over 2017,” the minutes said.