RTTNews - Reserve Bank of Australia board members considered lowering interest rates further at their most recent monetary policy meeting, minutes from the May 5 monetary policy meeting revealed on Tuesday, before deciding to stand pat at 3.0 percent as the best course for the nation's economy.
The minutes showed members finding signs that Australia's economic stimulus was having a beneficial effect, although the felt substantial growth was not expected to resume until around the end of the year. Higher unemployment and falling inflation were seen for the coming year.
On the global level, the minutes showed a wide range of economic data generally pointed to some improvement in confidence and economic activity in a number of countries, most notably in Asia. The minutes showed the evidence was accumulating that the maximum rate of global economic contraction may have passed.
Members also took note of a much better tone in financial markets, with strong recent rises in share prices and noticeable declines in credit spreads, with business able to raise more debt in capital markets. The RBA board felt sentiment remained fragile, and could easily be disturbed by adverse news.
Taking into account the economic and market developments that had come to light over the past month, the major easing in monetary policy that had already taken place and the substantial fiscal stimulus that was being implemented, members judged that the best course for this meeting was to leave the cash rate unchanged, the minutes said. They would continue to monitor the strength and durability of the tentative signs of an improvement in the global and domestic economies.
Earlier in the day, RBA Governor Glenn Stevens said that the global economy may have started to turn the corner on recovery and may rebound by the end of the year.
In remarks to the Canadian Australian Chamber of Commerce, Stevens added that it was too soon to say for sure if the rebound had begun, and that any global upswing will feature slow growth. There may yet be some pain, he said, because domestic policies can only do so much to combat the slowdown.
He said that Australia and Canada in particular are well-positioned for recovery, while China has already started to show some signs of breaking out of the economic slowdown that has gripped much of the world.
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