Statement by Glenn Stevens, Governor: Monetary Policy Decision - April 2016 | Media Releases | RBA
Central bank: rba | Type: statement | Date: 2016-04-05

Media Release
Statement by Glenn Stevens, Governor:
Monetary Policy Decision
5 April 2016
At its meeting today, the Board decided to leave the
cash rate unchanged at 2.0 per cent.
Recent information suggests that the global economy
is continuing to grow, though at a slightly lower pace
than earlier expected. While several advanced economies
have recorded improved growth over the past year, conditions
have become more difficult for a number of emerging
market economies. China's growth rate has continued
to moderate.
Commodity prices have generally increased a little recently,
but this follows very substantial declines over the
past couple of years. Australia's terms of trade
remain much lower than they had been in recent years.
Sentiment in financial markets has improved recently
after a period of heightened volatility. However, uncertainty
about the global economic outlook and policy settings
among the major jurisdictions continues. Funding costs
for high-quality borrowers remain very low and, globally,
monetary policy remains remarkably accommodative.
In Australia, the available information suggests that
the economy is continuing to rebalance following the
mining investment boom. Consistent with developments
in the labour market, overall GDP growth picked up over
2015, despite the contraction in mining investment.
The pace of lending to businesses has also picked up.
Inflation is quite low. Recent information has confirmed
that growth in labour costs remains quite subdued. Given
this, and with inflation also restrained elsewhere in
the world, inflation in Australia is likely to remain
low over the next year or two.
Given these conditions, it is appropriate for monetary
policy to be accommodative. Low interest rates are supporting
demand, while supervisory measures are working to emphasise
prudent lending standards and so to contain risks in
the housing market. Credit growth to households continues
at a moderate pace, albeit with a changed composition
between investors and owner-occupiers. The pace of growth
in dwelling prices has moderated in Melbourne and Sydney
and has remained mostly subdued in other cities.
The Australian dollar has appreciated somewhat recently.
In part, this reflects some increase in commodity prices,
but monetary developments elsewhere in the world have
also played a role. Under present circumstances, an
appreciating exchange rate could complicate the adjustment
under way in the economy.
At today's meeting, the Board judged that there
were reasonable prospects for continued growth in the
economy, with inflation close to target. The Board therefore
decided that the current setting of monetary policy
remained appropriate.
Over the period ahead, new information should allow
the Board to assess the outlook for inflation and whether
the improvement in labour market conditions evident
last year is continuing. Continued low inflation would
provide scope for easier policy, should that be appropriate
to lend support to demand.