RBA meeting shows no indication to move rates, as expected

As widely predicted, the minutes of October’s RBA monetary policy meeting indicate policy makers stay confident in the economic outlook, with no plans to change cash rate.

Reserve Bank of Australia
Source: Bloomberg

As widely predicted, the minutes of October’s RBA monetary policy meeting indicate policy makers remain confident with their economic outlook, expecting above-trend growth over the next two years.

Minutes showed that members decided it would be plausible to hold the cash rate steady as previously announced, keeping a record low of 1.5% since 2016.

Members of Australia’s central bank however did express concern over credit drought in the meeting, stating they would be watching the big banks closely considering revelations from the Royal Commission inquiry into the sector.

The board also noted the importance of monitoring the future supply of credit to keep economic activity steady and “appropriately supported.”

Analysts have previously speculated the central bank could cut interest rates, if banks continued to raise their borrowing costs further, however there were no indications of a rate change discussed in the October meeting.

The baord added the next move in rates was still more likely to be up than down, but there was not a strong case for a near-term move given inflation and wages remained subdued.

The minuets showed above-trend growth in the major advanced economies had led to further absorption of spare capacity in their labour markets.

This month’s RBA monetary policy statement showed “as a result, wages growth had increased noticeably… Most notably, in South Korea minimum wages had increased by more than 15 % in 2018 and a further increase of 10 % was scheduled for 2019.”

Policy makers also warned of risks from abroad, echoing previous sentiments and noting the on-going trade dispute between the US and China.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IG Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by writer

Find out more about