Australia central bank said record-low interest rates are underpinning consumer spending and house building while a lower currency is improving firms’ competitiveness.
“Members noted that recent domestic data had, on balance, been positive and judged that there were reasonable prospects for growth to increase gradually over the forecast period,” the Reserve Bank of Australia said Tuesday in minutes of its Feb. 2 policy meeting when rates were left unchanged at 2 percent.
It reiterated the approach set out in recent communication that it will monitor whether strong jobs growth is sustained and whether recent global market turmoil affects the domestic economy. It also repeated that contained inflation provided further scope to ease should that be needed.
Governor Glenn Stevens is weighing a darkening global outlook and its impact on Australia, the most China-dependent economy in the developed world, against signs of improvement in the local economy following a record quarterly jobs gain. Market wobbles in China have seen its sharemarket tumble, capital flee at a record pace and the slowest expansion last quarter since 2009.
Australia is grappling with weaker commodity prices as Chinese demand wanes and a mining investment boom unwinds. It has been aided by a currency depreciation of more than 30 percent in the past three years as well as easy monetary policy.
Source : Bloomberg