RBA still open to rate cuts - West­pac

Port Douglas & Mossman Gazette - - FRONT PAGE -

WEST­PAC chief econ­o­mist Bill Evans be­lieves the min­utes of the last meet­ing of the Re­serve Bank, re­leased on Tues­day, in­di­cate the RBA is re­tain­ing an eas­ing bias on mone­tary pol­icy -that is, it is still open to rate cuts -- be­cause of con­cerns about the econ­omy and the el­e­vated Aus­tralian dol­lar.

‘‘To­day’s min­utes sup­port our view that there will be no change in Oc­to­ber but by the time of the Novem­ber meet­ing the board will be able to as­sess: whether busi­ness and con­sumer con­fi­dence hold up fol­low­ing the ex­u­ber­ant reaction to the elec­tion re­sult; more in­for­ma­tion around the Aus­tralian dol­lar, which is clearly a source of con­cern for the bank; more data around the labour mar­ket; and of course the Septem­ber quar­ter in­fla­tion fig­ures,’’ he said. ‘‘We still favour prospects for a cut in Novem­ber while recog­nis­ing that wait­ing un­til De­cem­ber would not be a pol­icy mis­take. A De­cem­ber de­ci­sion would pro­vide even more in­for­ma­tion around those fac­tors.’’ Mr Evans noted the tone around the de­scrip­tion of the econ­omy was sub­dued: ‘‘firms’ cap­i­tal ex­pen­di­ture plans for non-min­ing in­vest­ment re­mained sub­dued for the com­ing year’’; ‘‘min­ing in­vest­ment was likely to de­cline no­tice­ably’’; ‘‘growth of house- hold con­sump­tion ... had been be­low aver­age’’ ... and ‘‘re­tail sales growth had been only mod­est in re­cent months’’; ‘‘labour mar­ket con­di­tions re­main some­what sub­dued ... (and there was) a de­cline in the em­ploy­ment to pop­u­la­tion ra­tio’’. Mr Evans added that his as­sess­ment of this com­men­tary did not in­di­cate that at this stage there are any con­cerns in the RBA about an over­heated hous­ing mar­ket.

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