‘[The minutes] share the optimistic tone of May’s Statement on Monetary Policy, but the more recent data releases suggest that the RBA may have to become a bit more cautious.’ – Paul Dales, Capital Economics
At its last meeting the Reserve Bank of Australia expressed concerns over subdued job growth and surging housing prices, the minutes of the Monetary Policy Committee meeting revealed on Monday. The RBA noted that inflation picked up over the past few months; therefore, the Bank projected that the inflation rate would likely hit its 2% target by 2018. Rising commodity prices combined with higher building materials and utilities prices provided a boost to inflation over the last few months. The Central bank also said that data released in April suggested that the economy grew at a moderate pace in the three-month period to March. Nevertheless, policymakers that interest rates and monetary policy would remain unchanged for the rest of this year due to weak job creation and high house prices in Sydney and Melbourne. Nevertheless, figures released by CoreLogic suggested that house prices started to decline slightly. The Bank also pointed to improving industrial output and both business and consumer sentiment. However, after the release, the Australian Dollar dropped to 74.21 against its US counterpart.
