- RBA minutes
RBA minutes showed the economic conditions assessment of main trading partners including China, Japan and the U.S. For all of them it is believed that their current growth level will stay above the average in the long run. China and the U.S. in particular had rebounded from a disappointing first quarter and had shown very favorable data this quarter. Nevertheless, the outlook for Japan was uncertain as the further effects of the tax hike and fiscal stimulus were hard to predict. Regarding the financial markets main topics were the actions of other central banks such the Fed's asset purchase reduction and changes introduced in the ECB. As for the Australian economy itself the focus was on the inflation, employment, exports and the overall GDP growth. The inflation was a bit higher than the members had expected at 3% year-ended. This was mainly due to the depreciation of the exchange rate. In spite of this the RBA was fairly confident that the inflation will stay in the 2-3% range. Even with somewhat improving data coming out of the labour market, the board members were a little sceptical and pointed to the small near-term employment growth prospects and possibly large spare labour capacity. Generally, the economy is expected to have slowed down a bit in the second quarter after the above average growth in the first one. In addition, the GDP is expected to be below trend for 2014 and 2015 accordingly picking up afterwards. Due to all of this the Board kept the cash rate at 2.5%.
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