The Reserve Bank of Australia's board members said that the outlook for near-term demand to be weaker, minutes from the board's April 7 monetary policy meeting revealed on Tuesday - but they still believe recovery to be likely by the end of 2009.
At the meeting, the board voted to cut interest rates by 25 basis points to a 49-year low of 3 percent, saying the economy is contracting, but at a slower pace than other major economies. The rate cut was the eighth since last September.
It was clear from the information that had become available over the past month that the very sharp contraction in the global economy in the final quarter of 2008 had continued during the first few months of this year, the minutes said. Forecasts for growth in both the industrial and emerging economies for 2009 and 2010 accordingly had been marked down further. Members noted, however, there was now considerable economic policy stimulus in place in most countries, which could be expected to support recovery over time. Tentative signs of improvement could be seen in some indicators for several countries, but it was too early yet to judge how durable they would prove to be.
Output likely will be down in the first quarter of 2009, the board members said, as the labor market continues to soften. As the job market continues to fall, inflation is expected to ease with it, the minutes showed.
The board members also noted that the global financial market was improving, although it will still take some time for a complete recovery.
Conditions and sentiment in global financial markets had continued to improve gradually over the past month, the minutes said. The improvement, which had included a sizeable rally in equity markets, had been helped by the announcements of more detailed plans for a resolution of banking system difficulties in the United States and other major countries. However, it would take time for the world financial system to be restored to health. In the near term, the contraction in economic activity would affect the quality of assets on the books of financial institutions.
Also on Tuesday, the Australian Bureau of Statistics said that March 2009 merchandise imports totaled A$17.318 billion, an increase of A$767 million or 5 percent from the revised February figure of A$16.551 billion.
The March 2009 figure compared to A$17.164 billion in March 2008.
The bureau said preliminary data showed goods imports on a balance of payments basis decreased a seasonally adjusted 4 percent on month. The other goods category fell 32 percent and non-monetary gold imports were down 46 percent.
Consumption goods rose 15 percent and the textiles, clothing and footwear category was up 21 percent.
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