- Reserve Bank of Australia
The Reserve Bank of Australia will continue thoroughly monitor economic developments in the coming months to assess whether further monetary policy stimulus are needed, as economic growth and business investment remains weak. The central bank cut its official cash rate to an all-time low of 2% in May, before keeping rates on hold at its June 2 gathering. The RBA said monetary policy should remain "accommodative" in the light of the current domestic and international economic environment. In the minutes, the central bank pointed to "output growth" as a key area of concern influencing monetary policy, saying it was forecasted to continue below trend until late 2016. It also underscored spare capacity in labour and product markets, as well as weak business investment. The central bank also reiterated the need for further currency depreciation to balance economic growth. The Australian Dollar has fallen more than 3% in the past month versus its US peer. Australia's economy expanded 2.3% in the first quarter from a year earlier, below its 30-year average of 3.3% and its projected potential of about 3%. Market participants are pricing in 15 basis points of rate cuts in the next 12 months, or less than a quarter-point reduction.
On the positive side, the minutes showed the RBA believed growth in China picked up slightly, and that the US Federal Reserve is likely to hike rates some time in 2015.
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