RBA's August minutes forecast long period of low interest rates

22 August 2019

The latest minutes from the RBA’s August meeting show the central bank expects a long period of record-low interest rates while the economy continues to weaken and the global economy suffers through trade wars.

The wages outlook for Australia remains subdued and the RBA says cutting rates again is not out of the question.

“Board members judged it reasonable to expect that an extended period of low interest rates would be required in Australia to make sustained progress towards full employment and achieve more assured progress towards the inflation target,” the RBA August minutes state.

“Members would consider a further easing of monetary policy if the accumulation of additional evidence suggested this was needed to support sustainable growth in the economy and the achievement of the inflation target over time.”

The RBA is also looking into more unconventional monetary measures to get the economy going that have been used overseas. They say their forecast for the global economy remains for reasonable growth but that it is being affected by trade war tensions between China and USA.

Back here at home and the RBA minutes said disappointing unemployment and wages growth figures continued to dog the economy.

“Combined with the reassessment of spare capacity in the labour market, this has led to a more subdued outlook for wages growth than three months earlier,” the minutes say.

JPMorgan chief economist Sally Auld spoke to The Australian about the RBA’s August meeting.

“Broadly speaking, this outlook is consistent with the idea that the RBA is hoping to deliver a period of stable policy in the coming months while observing the incoming data flow,” she said.

“We are forecasting the RBA to be on hold for the remainder of 2019, before expecting rate cuts in February and May next year.”


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