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Monetary Policy Decision 1st December 2015

Discussion in 'Property Market Economics' started by Rixter, 1st Dec, 2015.

  1. Rixter

    Rixter Well-Known Member

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    Media Release
    Number 2015-23
    Date 1 December 2015
    Embargo For Immediate Release
    Statement by Glenn Stevens, Governor: Monetary Policy Decision

    At its meeting today, the Board decided to leave the cash rate unchanged at 2.0 per cent.

    The global economy is expanding at a moderate pace, with some softening in conditions in the Asian region, continuing US growth and a recovery in Europe. Key commodity prices are much lower than a year ago, reflecting increased supply, including from Australia, as well as weaker demand. Australia's terms of trade are falling.

    The Federal Reserve is expected to start increasing its policy rate over the period ahead, but some other major central banks are continuing to ease monetary policy. Volatility in financial markets has abated somewhat for the moment. While credit costs for some emerging market countries remain higher than a year ago, global financial conditions overall remain very accommodative.

    In Australia, the available information suggests that moderate expansion in the economy continues in the face of a large decline in capital spending in the mining sector. While GDP growth has been somewhat below longer-term averages for some time, business surveys suggest a gradual improvement in conditions in non-mining sectors over the past year. This has been accompanied by stronger growth in employment and a steady rate of unemployment.

    Inflation is low and should remain so, with the economy likely to have a degree of spare capacity for some time yet. Inflation is forecast to be consistent with the target over the next one to two years.

    In such circumstances, monetary policy needs to be accommodative. Low interest rates are acting to support borrowing and spending. While the recent changes to some lending rates for housing will reduce this support slightly, overall conditions are still quite accommodative. Credit growth has increased a little over recent months, with credit provided by intermediaries to businesses picking up. Growth in lending to investors in the housing market has eased. Supervisory measures are helping to contain risks that may arise from the housing market.

    The pace of growth in dwelling prices has moderated in Melbourne and Sydney over recent months and has remained mostly subdued in other cities. In other asset markets, prices for commercial property have been supported by lower long-term interest rates, while equity prices have moved in parallel with developments in global markets. The Australian dollar is adjusting to the significant declines in key commodity prices.

    At today's meeting the Board again judged that the prospects for an improvement in economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate. Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand. The Board will continue to assess the outlook, and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target.


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    Frazz, MTR, Gingin and 2 others like this.
  2. MarkB

    MarkB Some guy on the internet Premium Member

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    The screen you are reading.
    Zero surprises there.

    In fact it was so unsurprising that the December statement was basically a copy and paste of the November statement (a few words have changed but 90+% is repeated).

    For those whose eyes glaze over when reading economics.... TL;DR - They're as low as they ideally want to go, they don't expect to go any lower - but they are prepared to if need be.

    The minutes of the RBA meetings are published 2 weeks after - so on 15 December we hopefully will get more than simply déjà vu.
     
  3. larrylarry

    larrylarry Well-Known Member

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    What are you hoping to read?
     
  4. MarkB

    MarkB Some guy on the internet Premium Member

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    The screen you are reading.
    They're a public body so really anything important they have to say should actually be in the statement above (where it is digestible for anyone) and not buried in the wall of text that is their minutes.

    Maybe some more comments on how they view the Fed.

    Or on capex (they've mentioned capex in the mining sector) (see below).

    More just a quick scan to better guage their current thoughts.

    [​IMG]
     
  5. Waterboy

    Waterboy Well-Known Member

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    Capex (when mines were being built) is being replaced by Exports (when mines are producing after they've been built).

    As a result, today's latest data on GDP grew 2.5% yoy as at September (exceeding expectations) despite the capex cliff. That's why the RBA is reluctant to cut further.

    Exports lift GDP growth to 2.5 per cent year-on-year