Meeting Minutes from February 1st
Provided by: Reserve Bank of Australia
Official Release: HTML

From the Release: "Members noted that the information that had become available over the past two months was generally positive. Developments in the international economy and financial markets had mostly been consistent with a gradual improvement in conditions and forecasts for global growth were generally being revised upward, as were projections for Australia’s terms of trade. Nevertheless, uncertainty remained over the likely pace of growth in the major economies once the effects of fiscal stimulus and the inventory cycle had abated. Concerns over sovereign debt issues had increased in the period leading up to the meeting, which might result in more cautious behaviour. Growth continued to be quite strong in Asia, and the Chinese and Indian authorities were starting to lessen the stimulus to their economies.

In the domestic economy, the labour market had strengthened materially but, on the other hand, reports about household spending in December and January had been quite mixed. There were some tentative signs that parts of the housing market were seeing the effect of the decline in assistance to first home-buyers and higher interest rates, though high-end housing values were continuing to increase. Overall, there had been a slight upward revision to the growth forecasts made at the time of the November 2009 Statement on Monetary Policy...

In considering the level of interest rates, members noted that the three increases in the cash rate late in 2009, together with the widening in the margins between the cash rate and many lending rates, had meant a material adjustment to the stance of monetary policy. Members judged that monetary conditions were no longer exceptionally accommodative, though the structure of interest rates was still somewhat below average.

As at the previous meeting, members considered the policy considerations to be finely balanced. Members expected that, if economic conditions continued to improve as expected, further increases in the cash rate were likely to be necessary. But they did not regard that outlook as requiring an increase at every meeting, and they saw the earlier moves to begin withdrawing monetary stimulus promptly as affording the Board a degree of flexibility in its subsequent decisions. This allowed the possibility of waiting to receive some more information on how the economy was responding to the monetary tightening that had already occurred. Such a course would also allow time to monitor events overseas.

Members noted that many market participants expected a further increase in the cash rate at this meeting. They concluded that, on balance, the stronger case was to leave the cash rate unchanged for the time being. This decision would be accompanied by communication that, if economic conditions evolved broadly as expected, further adjustments to policy would probably be needed over time to ensure that inflation remained consistent with the target over the medium term."

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Provided by: Reserve Bank of Australia
Official Release: Statement

The RBA surprised markets by holding its benchmark interest rate at 3.75%, when expectations had been for a 25 basis point hike. The decision comes after three successive increases and shows that the central bank would rather support the economy’s acceleration than deal with rising inflation pressures. It may also mean that the RBA will begin to space out their future hikes, raising rates in a more gradual manner. The central bank is concerned about consumers reactions to higher borrowing costs, as borrowing for home buying fell to a five-year low last month as mortgages have increased by 1% since October. That has outpaces the central bank’s 75 basis point increase in the benchmark rate.

From the Release: “With the risk of serious economic contraction in Australia having passed, the Board had moved at recent meetings to lessen the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker.  Lenders have generally raised rates a little more than the cash rate over recent months and most loan rates have risen by close to a percentage point.  Since information about the early impact of those changes is still limited, the Board judged it appropriate to hold a steady setting of monetary policy for the time being.

Interest rates to most borrowers nonetheless remain lower than average.  If economic conditions evolve broadly as expected, the Board considers it likely that monetary policy will, over time, need to be adjusted further in order to ensure that inflation remains consistent with the target over the medium term.”

The Aussie slid sharply in the wake of the release, after climbing in yesterday’s session. It hit a fresh six-week low at the 0.8778 level, with 0.8925 acting as resistance after it had acted as support last week.

Provided by: Reserve Bank of Australia
Official Release: Statement

From the Release: "In Australia, the downturn was relatively mild, and measures of confidence and business conditions suggest that the economy is in a gradual recovery. The effects of the early stages of the fiscal stimulus on consumer demand are fading, but public infrastructure spending is starting to provide more impetus to demand. Prospects for ongoing expansion of private demand, including business investment, have been strengthening. There have been some early signs of an improvement in labour market conditions. The rate of unemployment is now likely to peak at a considerably lower level than earlier expected.

Inflation has declined from its peak last year, helped by the fall in commodity prices at the end of 2008 and a noticeable slowing in private-sector labour costs during 2009. In underlying terms, inflation should continue to moderate in the near term, though it will probably not fall as far as thought likely six months ago...

With the risk of serious economic contraction in Australia having passed, the Board has moved at recent meetings to lessen gradually the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker.  These material adjustments to the stance of monetary policy will, in the Board’s view, work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead."

Meeting Minutes from November 3rd
Provided by: Reserve Bank of Australia
Official Release: Minutes

From the Release: "Overall, members considered that the recent information was consistent with the conclusions reached by the Board a month earlier: namely, conditions in the global and Australian economies were significantly better than had been expected earlier in the year when the Board had lowered the cash rate to 3 per cent; the Australian economy was operating with less spare capacity than earlier thought likely; and the growth outlook for the next few years had improved. The Board therefore concluded that it remained prudent, over time, gradually to reduce the degree of monetary accommodation.

In considering the pace of that adjustment, members were conscious of balancing risks. On the one hand, business and consumer confidence could prove fragile, and economic activity at home and abroad might slow more than expected as the effects of stimulus measures faded. Also, the rise in the exchange rate would constrain output and dampen inflationary pressure, and credit conditions for some borrowers remained quite difficult. On the other hand, a lengthy period with interest rates at a very low level carried its own risks, particularly once the threat of serious economic weakness had passed.

After giving careful consideration to these issues, members judged that it was prudent to take a further step to lessen the degree of monetary stimulus. Looking ahead, members expected that if economic conditions evolved as expected, further gradual adjustment in the cash rate would most likely be appropriate over time, though the pace of the adjustment remained an open question."

Provided by: Reserve Bank of Australia
Official Release: Statement

The Australian central bank gave a rather upbeat assessment of its economy, saying that economic conditions have been stronger than expected, with housing activity and infrastructure spending providing support. The labor market has also seen early signs of improvement, while inflation remains "unusually low because of temporary factors". Though housing credit has been solid, large firms are not borrowing as much because "they have sought to reduce leverage in an environment of tighter lending standards." The bank that the risk of serious economic contraction in Australia has passed, and tightening of monetary policy is now prudent. The end of the statement, which is reproduced below however does leave the bank leeway in slowing down its rate hikes in next months meeting.   

From the Release: "The Board noted that the rise in the exchange rate is likely to constrain output in the tradeables sector and dampen price pressures. Nonetheless, growth is likely to be close to trend over the year ahead and inflation close to target. With the risk of serious economic contraction in Australia now having passed, the Board’s view is that it is prudent to lessen gradually the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker. The adjustments at the October and November meetings will work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead."

The Aussie rallied slightly following the release, but then fell as it was caught up in risk aversion coming from falling equities and traders selling risky assets like the higher yielding Aussie in advance of the US FOMC decision later this week.

Meeting Minutes from October 5th
Provided by: Reserve Bank of Australia
Official Release: Minutes

The Reserve Bank of Australia minutes showed that policy makers are willing to tolerate further appreciation of the Aussie as they embark on their course to tighten monetary policy in an effort to restrain consumer prices as the economy strengthens. The Bank is likely to follow up its first interest rate increase with more in the coming months. The bank acknowledged that economic activity may slow following the end of government stimulus measures and that a higher Aussie will likely act as a "contractionary influence on activity and help contain inflation." 

From the Release: "Conditions in the domestic economy had for some time been noticeably stronger than had earlier been expected. Growth forecasts were tending to be revised up. Measures of both household and business confidence had recovered, household spending had remained relatively resilient, house-building activity was in the process of picking up and the risks of a sharp contraction in business investment had receded noticeably.

Members noted that there was still a possibility that the recent strength in the domestic economy had been largely due to the greater-than-expected impact of the fiscal stimulus, which left open the attendant risk that activity might slow as that stimulus faded. It was also likely that the appreciation of the exchange rate would act as a contractionary influence on activity and help contain inflation.

Overall, members concluded that, while downside risks to the domestic economy could not be ruled out, they had diminished significantly over recent months. This meant that the balance of risks was now such that the current very expansionary setting of policy was no longer necessary, and possibly imprudent. The Board therefore decided in favour of raising the cash rate."

Provided by: Reserve Bank of Australia
Official Release: Statement

The Reserve Bank of Australia's Glenn Stevens surprised markets by raising interest rates by 0.25% at the conclusion of today's meeting. With economic conditions in Australia stronger than expected the Board decided it was time to ease its loose monetary policy. 

From the Release: "In late 2008 and early 2009, the cash rate was lowered quickly, to a very low level, in expectation of very weak economic conditions and a recognition that considerable downside risks existed. That basis for such a low interest rate setting has now passed, however. With growth likely to be close to trend over the year ahead, inflation close to target and the risk of serious economic contraction in Australia now having passed, the Board’s view is that it is now prudent to begin gradually lessening the stimulus provided by monetary policy. This will work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead."

Provided by: Reserve Bank of Australia
Official Release: Statement

From the Release: "With considerable economic policy stimulus in train around the world, the global economy is resuming growth. Growth in China has been very strong, which is having a significant impact on other economies in the region and on commodity markets. The major economies appear to be approaching a turning point... 

Economic conditions in Australia have been stronger than expected, with consumer spending, exports and business investment notable for their resilience. Measures of confidence have recovered. Some spending has probably been brought forward by the various policy initiatives; in those areas demand may soften in the near term. Some types of capital spending are also likely to be held back for a while by financing constraints. But overall, it now appears that investment may not be as weak over the year ahead as earlier expected. Higher dwelling activity and public demand will also start to provide more support to spending soon and, hence, growth is likely to firm going into 2010.

Unemployment has not, to this point, risen as far as had been expected. Weaker demand for labour, evident in a decline in hours worked, nonetheless has seen a moderation in labour costs. Helped by this and the earlier fall in energy and commodity prices, inflation has been declining, though measures of underlying inflation remained higher than the target on the latest reading. Underlying inflation should continue to moderate in the near term, but the likelihood of inflation being persistently below the target now looks low."

Provided by: Reserve Bank of Australia
Official Release: Statement

From the Release: "Economic conditions in Australia have been stronger than expected a few months ago, with both consumer spending and exports notable for their resilience. Measures of confidence have recovered a good deal of ground. This suggests that the risk of a severe contraction in the Australian economy has abated. The most likely outcome in the near term is a period of sluggish output, with consumer spending likely to slow somewhat and investment remaining weak. Stronger dwelling activity and public spending will start to provide more support to overall demand soon, and growth is likely to firm into 2010.

Inflation is gradually moderating, given the earlier decline in energy and commodity prices, and the effects of weaker demand on prices and labour costs. Given the current prospects for demand and output, this moderation should continue over the year ahead. The higher exchange rate over recent months will assist this moderation, at the margin...

The Board’s judgment is that the present accommodative setting of monetary policy is appropriate given the economy’s circumstances. The Board will continue to monitor how economic and financial conditions unfold and how they impinge on prospects for sustainable growth in economic activity and achieving the inflation target."

Meeting Minutes from July
Provided by: Reserve Bank of Australia
Previous Release: Minutes

Provided by: Reserve Bank of Australia
Official Release: Statement

From the Release: "A pick-up in housing credit demand suggests stronger dwelling activity is likely later in the year. House prices are tending to rise. Business borrowing, on the other hand, has been declining, as companies postpone investment plans and seek to reduce leverage in an environment of tighter lending standards.  Large firms have had good access to equity capital, which is assisting in strengthening their financial structures.

Monetary policy has been eased significantly.  Market and mortgage rates are at very low levels by historical standards, despite recent small increases. Business loan rates are below average.  The effects of these changes will still be coming through for some time yet. Fiscal measures are also providing considerable support for demand.

The Board’s current view is that the outlook for inflation allows some scope for further easing of monetary policy, if needed.  In assessing how it might use that scope, the Board will continue to monitor how economic and financial conditions unfold and how they impinge on prospects for a sustainable recovery in economic activity."

Meeting Minutes from June
Provided by: Reserve Bank of Australia
Previous Release: Minutes

Provided by: Reserve Bank of Australia
Official Release: Statement

The Reserve Bank of Australia held rates steady at 3% today at a 49-year low of 3%. The accompanying statement said that the global economy is stabilizing, with emerging economies and China leading the way. However, the developed major countries may see a slower recovery when it occurs. The Australian economy continues to contract which is putting downward pressure on wages and inflation, though a pick up in housing credit demand is a positive sign. Even though the bank has cut rates now by 425 basis points since September 2008 in response to the crisis, the bank held out the possibility of further easing at the end of its statement. That pressured the Aussie in the aftermath of the release, but it rebounded in later trading.

From the Release: "Monetary policy has been eased significantly. Market and mortgage rates are at very low levels by historical standards. Business loan rates are below average. Much of the effect of this is yet to be observed. Fiscal measures are also providing considerable support for demand.

Nonetheless, the prospect of inflation declining over the medium term suggests that scope remains for some further easing of monetary policy, if needed. In assessing how it might use that scope, the Board will continue to monitor how economic and financial conditions unfold, and how they impinge on prospects for a sustainable recovery in economic activity."

Meeting Minutes from May 4th and 5th
Provided by: Reserve Bank of Australia
Official Release: Minutes

Provided by: Reserve Bank of Australia
Official Release: Statement

The Reserve bank of Australia left their key benchmark interest rate unchanged at 3%, which is the lowest rates have been in 49 years. Following the aggressive string of rate cuts that have brought rates down from 7.25%, Governor Glenn Stevens judges its time to assess how the rate cuts and government fiscal stimulus will work on the economy. The statement pointed to some positive signs that could support a recovery in the economy including a pick up in China, a firming of commodity prices, and the considerable economic policy stimulus in train in most countries that should help ease the global downturn. Stevens also pointed to loose monetary policy which has brought market and mortgage rates to very low levels by historical standards and business loan rates are below average, which has reduced debt-servicing burdens considerably. 

The Aussie hit a fresh high for this year overnight near 0.7477 though it gave up some of those gains in NY trading. Today's high goes back to November 5th of last year, and the pair seems to be breaking out from important resistance this week at the 0.73 level.