Statement by Glenn Stevens, Governor: Monetary Policy Decision - April 2011 | Media Releases | RBA
Central bank: rba | Type: statement | Date: 2011-04-05

Media Release
Statement by Glenn Stevens, Governor:
Monetary Policy Decision
5 April 2011
At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per
The global economy is continuing its expansion, led by very strong growth in the
Asian region. The recent disaster in Japan will have a noticeable effect
on Japanese production in the near term, although the impact on the broader
Asian region is expected to be limited. Commodity prices, including oil prices,
have risen over recent months, pushing up measures of consumer price inflation
in many countries. A number of countries have been moving to tighten their
monetary policy settings. Overall, though, financial conditions for the global
economy remain accommodative.
Australia's terms of trade are at their highest level since the early 1950s and
national income is growing strongly. Private investment is picking up, mainly
in the resources sector, in response to high levels of commodity prices.
In the household sector thus far, in contrast, there continues to be caution
in spending and borrowing, and a higher rate of saving out of current income.
The natural disasters over the summer have reduced output and the resumption
of coal production in flooded mines is taking longer than initially expected.
Production levels should, however, recover over the months ahead, and there
will be a mild boost to demand from the rebuilding efforts as they get under
Asset values have generally been little changed over recent months and overall credit
growth remains quite subdued, notwithstanding evidence of some greater willingness
to lend. Business balance sheets generally are being strengthened, and the
run‑up in household leverage has abated.
Growth in employment has moderated over recent months and the unemployment rate has
held steady at 5 per cent. Most leading indicators suggest further
growth in employment, though most likely at a slower pace than in 2010. Reports
of skills shortages remain confined, at this point, to the resources and
related sectors. After the significant decline in 2009, growth in wages has
returned to rates seen prior to the downturn.
Inflation is consistent with the medium-term objective of monetary policy, having
declined significantly from its peak in 2008. These moderate outcomes are
being assisted by the high level of the exchange rate, the earlier decline
in wages growth and strong competition in some key markets, which have worked
to offset large rises in utilities prices. Production losses due to weather
are temporarily raising prices for some agricultural produce, which will
boost the March quarter CPI, but these prices should fall back later in the
year. Overall, looking through these temporary effects, the Bank expects
that inflation over the year ahead will continue to be consistent with the
2–3 per cent
At today's meeting, the Board judged that the current mildly restrictive stance
of monetary policy remained appropriate in view of the general macroeconomic
Dr Philip Lowe
Assistant Governor (Economic)
Phone: +61 2 9551 8800
Dr Guy Debelle
Assistant Governor (Financial Markets)
Phone: +61 2 9551 8200
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