Tuesday, 19 May, 2015
(Bloomberg) — Board agreed May’s statement communicating rate-cut decision “would not contain any guidance on the future path of monetary policy. Members did not see this as limiting the board’s scope for any action that might be appropriate at future meetings,” RBA says in minutes of May 5 meeting released in Sydney. * Board discussed whether to cut rates in May or wait until June: “they could see cases both for moving at this meeting or at the subsequent meeting” * Waiting to cut rates in June would “bring the advantage of additional information on the economy,” incl. details of govt’s annual budget; on other hand, given RBA was releasing revised economic forecasts a few days after May meeting, “challenges of communication might be more effectively met with a reduction in cash rate” in May * Taking all factors into account, board decided “best course was to ease monetary policy further” in May * RBA repeats further depreciation in A$ seemed to be “both likely and necessary,” particularly given significant declines in key commodity prices * Data suggested growth in March qtr “bit below average”; growth expected to continue at similar pace over coming yr before picking up gradually to above-avg pace over course of 2016/17 * Uncertainty about both timing and speed of recovery in non-mining investment remained key risks to forecasts * Fiscal consolidation by federal and state govts expected to contribute to subdued growth of domestic demand over forecast period * Domestic labor cost pressures expected to remain well contained and underlying inflation expected to remain consistent with inflation target over forecast period * Board discussed potential risk that low rates could foster imbalances in housing mkt: “while concerned about the very strong pace of growth of housing prices in Sydney, and observing that conditions in Melbourne were strong, members saw much more muted trends in other capital cities” * It didn’t appear that growth of housing credit, either to investors or owner-occupiers, had been increasing over recent months * Growth appeared to have slowed in China and weakness in Chinese property mkt continued to represent “a significant risk” both for Chinese growth and demand for construction-related commodities * Terms of trade had declined and were expected to continue doing so *Unemployment rate forecast to rise further, before starting to decline gradually toward end of forecast period NOTE: RBA cut its benchmark rate 25bps to record-low 2% on May 5 Archr LLP is Authorised and regulated by the Financial Conduct Authority (FCA reference 617163). Archr LLP is not covered by the Financial Services Compensation Scheme (FSCS). Archr is registered in England and Wales No. OC371018. Registered office Chancery House, 30 St Johns Road, Woking, Surrey, GU21 7SA This message may contain confidential or privileged information. If you are not the intended recipient, please advise us immediately and delete this message. The unauthorised use, disclosure, distribution and/or copying of this e-mail or any information it contains is prohibited. This information is not, and should not be construed as, a recommendation, solicitation or offer to buy or sell any securities or related financial products. This information does not constitute investment advice, does not constitute a personal recommendation and has been prepared without regard to the individual financial circumstances, needs or objectives of persons who receive it. You are receiving this email because you are a valued client of Archr.