RBA Minutes: Domestic Economy Improved More Than Expected

Members of the Reserve Bank of Australia's monetary policy board said that the country's economy has continued to pick up steam, and at a slightly faster rate than expected, minutes from the central bank's November 6 meeting revealed on Tuesday.

At the meeting, the RBA kept its benchmark interest rate on hold at a record low of 1.50 percent for the 26th consecutive meeting. The interest rate has been at the current level since August 2016.

"Members judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time," the minutes said.

The appreciating U.S. dollar and its effect on the Australian currency has helped to boost domestic growth, the minutes said. They added that the inflation rate remained low and stable beneath the midpoint of the target range, as expected.

They further added that while a change to the rate is not imminent, it's likely to be an increase - not a decrease, owing to the improvements in the economy.

"There was no strong case for a near-term adjustment in monetary policy. Rather, members assessed that it would be appropriate to hold the cash rate steady and for the Bank to be a source of stability and confidence while this progress unfolds," the minutes said.

Although policymakers expect further progress in the reduction of unemployment and inflation returning to target, this progress is likely to be gradual, the bank noted.

The Australian economy was performing well with the GDP growing by 3.4 percent and the unemployment rate declining to five percent over the past year, the RBA said.

The bank revised up its economic growth forecasts for 2018 and 2019. Economic growth is expected to be around 3.5 percent over these two years, before slowing in 2020 due to slower growth in exports of resources.

"Taking account of the available information on current economic and financial conditions, as well as the latest forecasts, members assessed that the current stance of monetary policy would continue to support economic growth and allow for further gradual progress to be made in reducing the unemployment rate and returning inflation towards the midpoint of the target," the minutes said.