Statement by Glenn Stevens, Governor: Monetary Policy Decision - June 2016 | Media Releases | RBA
Central bank: rba | Type: statement | Date: 2016-06-07

Media Release
Statement by Glenn Stevens, Governor:
Monetary Policy Decision
7 June 2016
At its meeting today, the Board decided to leave the cash rate unchanged at 1.75 per cent.
The global economy is continuing to grow, at a lower than average pace. Several advanced
economies have recorded improved conditions over the past year, but conditions have
become more difficult for a number of emerging market economies. China's growth
rate moderated further in the first part of the year, though recent actions by Chinese
policymakers are supporting the near-term outlook.
Commodity prices are above recent lows, 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.
In financial markets, conditions have generally been calmer for the past several months
following the period of volatility early in the year. Attention is now turning to some
particular event risks. Funding costs for high-quality borrowers remain very low and,
globally, monetary policy remains remarkably accommodative.
In Australia, recent data suggest overall growth is continuing, despite a very large
decline in business investment. Other areas of domestic demand, as well as exports, have
been expanding at a pace at or above trend. Labour market indicators have been more
mixed of late, but are consistent with continued expansion of employment in the near
Inflation has been quite low. Given very subdued growth in labour costs and very low
cost pressures elsewhere in the world, this is expected to remain the case for some
Low interest rates have been supporting domestic demand and the lower exchange rate
overall is helping the traded sector. Over the past year, growth in credit to businesses
has picked up, even as that to households has moderated a little. These factors are all
assisting the economy to make the necessary economic adjustments, though an appreciating
exchange rate could complicate this.
Indications are that the effects of supervisory measures have strengthened lending
standards in the housing market. Separately, a number of lenders are also taking a more
cautious attitude to lending in certain segments. Dwelling prices have begun to rise
again recently. But considerable supply of apartments is scheduled to come on stream
over the next couple of years, particularly in the eastern capital cities.
Taking account of the available information, and having eased monetary policy at its May
meeting, the Board judged that holding the stance of policy unchanged at this meeting
would be consistent with sustainable growth in the economy and inflation returning to
target over time.