Australia holds rate, sees firmer economy, scope to ease

Australia's central bank left its benchmark cash rate steady at 2.0 percent, saying the prospects for improved economic conditions had "firmed a little over recent months," but the outlook for inflation may "afford scope for further easing of policy, should that be appropriate to lend support to demand."
While the Reserve Bank of Australia's (RBA) reference to improved economic conditions and scope for easing is new, it also repeated that it would continue to assess the outlook to determine whether the current policy stance was consistent with its targets for growth and inflation.
In his statement, RBA Governor Glenn Stevens acknowledged the recent increase in home loan rates as "slightly" reducing the support to borrowing and spending, but added that overall financial condition were "still quite accommodative."
A hike in as mortgage rates by some of Australia's banks had ignited speculation the RBA would cut rates to counter any monetary tightening.
However, Stevens also said surveys had suggested a "gradual improvement" economic conditions over the past year, a slightly more upbeat view than in recent months when Stevens merely said that the moderate economic expansion was continuing, accompanied by rising employment.
Stevens also appeared more optimistic about the rise in house prices in Melbourne and Sydney, saying the pace of growth had moderated of late. In recent months the RBA also only said that house prices were continuing to rise strongly in the country's two largest cities.
Australia's inflation rate was steady at 1.5 percent in the third and second quarters while Gross Domestic Product expanded by only 0.2 percent in the second quarter from the first for annual growth of 2.0 percent, down from 2.5 percent in the first quarter.
The unemployment rate was unchanged at 6.2 percent in September.



The Reserve Bank of Australia issued the following statement by its governor, Glenn Stevens"

"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 further 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, in part reflecting increased supply, including from Australia. 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. While GDP growth has been somewhat below longer-term averages for some time, business surveys suggest a gradual improvement in conditions over the past year. This has been accompanied by somewhat 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, but a little lower than earlier expected.
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 growth in lending to investors in the housing market easing slightly while that for owner-occupiers appears to be picking up. Dwelling prices continue to rise in Melbourne and Sydney, though the pace of growth has moderated of late. Growth in dwelling prices has remained mostly subdued in other cities. Supervisory measures are helping to contain risks that may arise from the housing market.
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 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 at this meeting. 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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Australia holds rate, sees firmer economy, scope to ease

Australia holds rate, data still to determine next move

Australia's central bank left its benchmark cash rate steady at 2.0 percent, as expected, and confirmed its guidance that new information on economic and financial conditions would determine whether its current stance fosters sustainable economic growth inflation in line with its target. The Reserve Bank of Australia (RBA), which has cut its rate by 50 basis points this year to counter slower growth from reduced demand for its raw materials, repeated its view from last month that the country's economy is continuing to expand moderately and its policy stance needs to be accommodative to support borrowing and spending.
The RBA also repeated that the country's economy was likely to be operating with spare capacity for some time with inflationary pressures contained so inflation would remain consistent with the bank's target over the next one to two years, even with a lower exchange rate.
Australia's inflation rate rose to 1.5 percent in the second quarter from 1.3 percent in the first quarter, below the RBA's target of 2-3 percent. Gross Domestic Product in the second quarter expanded by only 0.2 percent from the first quarter for annual growth of 2.0 percent.
The Australian dollar has been depreciating since September 2014 but over the last month it has firmed slightly. It was trading at 1.40 to the U.S. dollar today, down almost 13 percent this year.


The Reserve Bank of Australia issued the following statement by its governor, Glenn Stevens:


"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 further softening in conditions in China and east Asia of late, but stronger US growth. Key commodity prices are much lower than a year ago, in part reflecting increased supply, including from Australia. 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 policy. Equity market volatility has continued, but the functioning of financial markets generally has not, to date, been impaired. Long-term borrowing rates for most sovereigns and creditworthy private borrowers remain remarkably low. Overall, global financial conditions remain very accommodative.
In Australia, the available information suggests that moderate expansion in the economy continues. While growth has been somewhat below longer-term averages for some time, it has been accompanied with somewhat stronger growth of employment and a steady rate of unemployment over the past year. Overall, the economy is likely to be operating with a degree of spare capacity for some time yet, with domestic inflationary pressures contained. Inflation is thus forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate.
In such circumstances, monetary policy needs to be accommodative. Low interest rates are acting to support borrowing and spending. Credit is recording moderate growth overall, with growth in lending to the housing market broadly steady over recent months. Dwelling prices continue to rise strongly in Sydney and Melbourne, though trends have been more varied in a number of other cities. Regulatory measures are helping to contain risks that may arise from the housing market. In other asset markets, prices for commercial property have been supported by lower long-term interest rates, while equity prices have moved lower and been more volatile recently, in parallel with developments in global markets. The Australian dollar is adjusting to the significant declines in key commodity prices.
The Board today judged that leaving the cash rate unchanged was appropriate at this meeting. Further information on economic and financial conditions to be received over the period ahead will inform the Board's ongoing assessment of 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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Australia holds rate, data still to determine next move

Australia holds rate, fresh data to determine next move

Australia's central bank left its benchmark cash rate steady at 2.00 percent, as widely expected, repeating its recent guidance that fresh economic data will guide its outlook and determine whether the current policy stance "will most effectively foster sustainable growth and inflation consistent with the target."
The Reserve Bank of Australia (RBA), which has cut its rate by a total of 50 basis points this year, also repeated its comment from its previous board meeting that the "Australian dollar is adjusting to the significant declines in key commodity prices," omitting any reference for the need of further depreciation of the exchange rate.
The Australian dollar, known as the Aussie, started depreciating in September 2014 and has now fallen to levels not seen since April 2009. In response to the RBA's latest statement, the Aussie firmed slightly to 1.399 to the U.S. dollar from around 1.40, but is still down 12.8 percent this year.
In his statement, RBA Governor Glenn Stevens acknowledged the "further softening in conditions in China and east Asia of late," but added that growth the United States was stronger and contrasted the recent volatility in equity markets from developments in China with relative stability in other financial markets.
However, Stevens also said key commodity prices were "much lower than a year ago," resulting in falling terms of trade for Australia.
Australia's economy is continuing to expand moderately, Steven said, with spare capacity likely to continue for "some time yet," and inflationary pressures are contained so inflation will remain consistent with the RBA's target for the next one to two years, even with a lower exchange rate.
Australia's inflation rate rose slightly to 1.50 percent in the second quarter of the year from 1.3 percent in the first quarter, still well below the RBA's target of 2 to 3 percent.
"In such circumstances, monetary policy needs to be accommodative," Stevens said, adding that house prices in Sydney continue to rise strongly and the central bank was working with other regulators to contain any risks that may arise from the housing market.


The Reserve Bank of Australia issued the following statement:


"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 further softening in conditions in China and east Asia of late, but stronger US growth. Key commodity prices are much lower than a year ago, in part reflecting increased supply, including from Australia. 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 policy. Equity markets have been considerably more volatile of late, associated with developments in China, though other financial markets have been relatively stable. Long-term borrowing rates for most sovereigns and creditworthy private borrowers remain remarkably low. Overall, global financial conditions remain very accommodative.
In Australia, most of the available information suggests that moderate expansion in the economy continues. While growth has been somewhat below longer-term averages for some time, it has been accompanied with somewhat stronger growth of employment and a steady rate of unemployment over the past year. Overall, the economy is likely to be operating with a degree of spare capacity for some time yet, with domestic inflationary pressures contained. Inflation is thus forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate.
In such circumstances, monetary policy needs to be accommodative. Low interest rates are acting to support borrowing and spending. Credit is recording moderate growth overall, with growth in lending to the housing market broadly steady over recent months. Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities. The Bank is working with other regulators to assess and contain risks that may arise from the housing market. In other asset markets, prices for commercial property have been supported by lower long-term interest rates, while equity prices have moved lower and been more volatile recently, in parallel with developments in global markets. The Australian dollar is adjusting to the significant declines in key commodity prices.
The Board today judged that leaving the cash rate unchanged was appropriate at this meeting. Further information on economic and financial conditions to be received over the period ahead will inform the Board's ongoing assessment of 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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Australia holds rate, fresh data to determine next move

Australia holds rate, omits need for A$ to ease further

Australia's central bank left its benchmark cash rate steady at 2.0 percent, as expected, and repeated its guidance from last month that its policy stance would be determined by "further information on economic conditions and financial conditions to be received over the period ahead."
But the Reserve Bank of Australia (RBA), which has cut its rate twice this year by a total of 50 basis points, added that the Australian dollar, known as the aussie, "is adjusting to the significant declines in key commodity prices," omitting its frequent statement that "further depreciation seems both likely and necessary," signaling that it is more comfortable with the current exchange rate.
The aussie has been depreciating since September 2014 and fallen to levels not seen since April 2009. In response to the RBA's statement, the aussie firmed to 1.36 to the U.S. dollar from 1.37, for a drop of 10.3 percent since the start of the year and a fall of 17.6 percent since the start of 2014.
In his statement, RBA Governor Glenn Stevens repeated that Australia's economy was continuing to growth at a pace that its "somewhat below long-term averages," but added today that this was associated with "somewhat stronger growth of employment" compared with July's statement that unemployment had been "little changed."
In June Australia's unemployment rate rose to 6.0 percent from 5.9 percent in May but was still down from the recent peak of 6.3 percent in October 2014.
However, as in recent statements, Stevens added that country's economy would be operating with spare capacity for some time and inflation was forecast to remain consistent with the RBA's target over the next one to two years, even with a lower exchange rate.
Australia's headline inflation rate rose slightly to 1.5 percent in the second quarter form 1.3 percent in the first quarter, well below the RBA's target of 2 - 3 percent.


The Reserve Bank of Australia issued the following statement by its governor, Glenn Stevens:

"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, but some key commodity prices are much lower than a year ago. Much of this trend appears to reflect increased supply, including from Australia. Australia's terms of trade are falling nonetheless.
The Federal Reserve is expected to start increasing its policy rate later this year, but some other major central banks are continuing to ease policy. Hence, global financial conditions remain very accommodative. Despite fluctuations in markets associated with the respective developments in China and Greece, long-term borrowing rates for most sovereigns and creditworthy private borrowers remain remarkably low.
In Australia, the available information suggests that the economy has continued to grow. While the rate of growth has been somewhat below longer-term averages, it has been associated with somewhat stronger growth of employment and a steady rate of unemployment over the past year. Overall, the economy is likely to be operating with a degree of spare capacity for some time yet. Recent information confirms that domestic inflationary pressures have been contained. That should remain the case for some time, given the very slow growth in labour costs. Inflation is thus forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate.
In such circumstances, monetary policy needs to be accommodative. Low interest rates are acting to support borrowing and spending. Credit is recording moderate growth overall, with growth in lending to the housing market broadly steady over recent months. Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities. The Bank is working with other regulators to assess and contain risks that may arise from the housing market. In other asset markets, prices for equities and commercial property have been supported by lower long-term interest rates. The Australian dollar is adjusting to the significant declines in key commodity prices.
The Board today judged that leaving the cash rate unchanged was appropriate at this meeting. Further information on economic and financial conditions to be received over the period ahead will inform the Board's ongoing assessment of 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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Australia holds rate, omits need for A$ to ease further