The minutes of the RBA’s October monetary policy meeting have just been released with the tone very similar to that seen in the policy statement, albeit in more detail.
On the hottest topic of the moment, investor activity in the established housing market, there is little for the markets to chew on with the Board merely mentioning that ‘ over the previous six months, overall housing credit growth had been steady at around 7 per cent in annualised terms, but members noted that growth of investor credit had increased to close to 10 per cent.’ They elaborate further by stating that ‘ there had been a further pick-up in lending to investors in housing’ and that ‘members discussed the importance of lenders maintaining strong lending standards and the ongoing dialogue between the Bank and APRA on the matter’. As for the actual measures to address this recent pick-up in activity, well, that will have to wait for another day.
On China, Australia’s most important trading partner, the Board noted that ‘some indicators of economic conditions had softened a little’ and that they had been ‘briefed that the Chinese authorities had scope to ease policy if needed to support GDP growth’. Still, creating doubt over whether than would actually be required, ‘they also noted that the authorities’ target for employment growth in 2014 as a whole was already close to being achieved’. On Japan, Australia’s second-largest trade partner, they noted that ‘prospects for growth remained unclear, even though labour market conditions had been relatively tight, with average labour earnings having increased a little over the past year’.
Elsewhere the status quo was largely maintained with the Australian Dollar ‘high by historical standards – particularly given recent declines in key commodity prices’ with its continued elevated level ‘offering less assistance than would normally be expected in achieving balanced growth in the economy’. On the domestic labour market the Board also stated that ‘while forward-looking indicators pointed to modest employment growth in the months ahead, there was a degree of spare capacity in the labour market and it would probably be some time before the unemployment rate declined consistently’.
For the full release from the RBA click here: http://www.rba.gov.au/monetary-policy/rba-board-minutes/2014/07102014.html