- RBA minutes
Reserve Bank of Australia policy makers discussed keeping interest rates on hold at the May 3 meeting so they could await more information, but decided on balance that a cut then would help bring inflation to target over time. A "broad-based" cooling of inflation pressures persuaded the central bank that the economy would be supported by an interest-rate cut even as the growth outlook remained steady. RBA board members decided to cut the official cash rate by a quarter point to 1.75%, according to the minutes of its latest policy meeting. Governor Glenn Stevens's first interest-rate cut in a year came after a report last month showed that some of the ill disinflationary winds blowing in economies from Japan to Europe have reached Australia. The consumer price index fell for the first time since 2008 in the first quarter, while annual core growth eased to the weakest on record, prompting the central bank to revise its inflation outlook. Yet, the RBA noted there had been no material change in its forecast for growth and was still of the view that the economy continued to rebalance away from the mining sector, backed up by 'very accommodative' monetary policy and a lower exchange rate since 2013. Despite the RBA's reluctance to ease monetary policy, before the minutes' release, futures markets had priced in the chances of a another cut, to 1.5%, for the August meeting at 80%, and the possibility of September cut at 92%.
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