Statement by Glenn Stevens, Governor: Monetary Policy Decision - March 2015 | Media Releases | RBA
Central bank: rba | Type: statement | Date: 2015-03-03

Media Release
Statement by Glenn Stevens, Governor:
Monetary Policy Decision
3 March 2015
At its meeting today, the Board decided to leave the cash rate unchanged at 2.25
Growth in the global economy continued at a moderate pace in 2014. A similar performance
is expected by most observers in 2015, with the US economy continuing to
strengthen, even as China's growth slows a little from last year's
Commodity prices have declined over the past year, in some cases sharply. The price
of oil in particular has fallen significantly. These trends appear to reflect
a combination of lower growth in demand and, more importantly, significant
increases in supply. The much lower levels of energy prices will act to strengthen
global output and temporarily to lower CPI inflation rates.
Financial conditions are very accommodative globally, with long-term borrowing rates
for several major sovereigns at all-time lows over recent months. Some risk
spreads have widened a little but overall financing costs for creditworthy
borrowers remain remarkably low.
In Australia the available information suggests that growth is continuing at a below-trend
pace, with domestic demand growth overall quite weak. As a result, the unemployment
rate has gradually moved higher over the past year. The economy is likely
to be operating with a degree of spare capacity for some time yet. With growth
in labour costs subdued, it appears likely that inflation will remain consistent
with the target over the next one to two years, even with a lower exchange
Credit is recording moderate growth overall, with stronger growth in lending to investors
in housing assets. Dwelling prices continue to rise strongly in Sydney, though
trends have been more varied in a number of other cities over recent months.
The Bank is working with other regulators to assess and contain risks that
may arise from the housing market. In other asset markets, prices for equities
and commercial property have risen, in part as a result of declining long-term
interest rates.
The Australian dollar has declined noticeably against a rising US dollar, though
less so against a basket of currencies. It remains above most estimates of
its fundamental value, particularly given the significant declines in key
commodity prices. A lower exchange rate is likely to be needed to achieve
balanced growth in the economy.
At today's meeting the Board judged that, having eased monetary policy at the
previous meeting, it was appropriate to hold interest rates steady for the
time being. Further easing of policy may be appropriate over the period ahead,
in order to foster sustainable growth in demand and inflation consistent
with the target. The Board will further assess the case for such action at
forthcoming meetings.
Media Office
Information Department