Minutes of December RBA meeting suggest that the central bank is still on track to further easing next year, probably in February. Employment and wages growth would remain the main reason for doing so. It’s noted that “current rate of wages growth was not consistent with inflation being sustainably within the target range”. Also, “nor was it consistent with consumption growth returning to trend”. Furthermore, private sector wages growth has indeed “levelled out in recent quarters, following its gentle upward trend of the previous couple of years”.”

RBA members also discussed the effect of lower interest rates on confidence, including business and consumer. However, “while members recognised the negative confidence effects for some parts of the community arising from lower interest rates, they judged that the impact of these effects was unlikely to outweigh the stimulus to the economy from lower interest rates.”

Suggested readings on RBA minutes:

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