The minutes from this months RBA Board meeting are out and it is no wonder that Westpac Chief Economist Bill Evans has moved his rate cut calls out in time because these minutes read like there is a recovery on the way for the Australian economy.
The RBA made a widely expected call on December 3, leaving Australia’s cash rate at the record low 2.5%. That’s despite the board noting: “While the exchange rate had depreciated over the month, members agreed that it remained uncomfortably high and a lower level would likely be needed to achieve balanced growth in the economy.”
The RBA Board clearly thinks monetary policy is working and working well. Minutes once again referred to the “substantial degree of monetary stimulus” that is coming down the pipe.
The board also noted “further signs of the stimulatory effects of low interest rates, most notably in the housing market, and additional effects were still likely to be coming through. At the same time, inflation remained within the target.”
So no need to cut, but no signs of inflation or a need to hike anytime soon either.
The Goldilocks economy – now only if the Aussie Dollar would fall.