Statement by Glenn Stevens, Governor: Monetary Policy Decision - December 2013 | Media Releases | RBA
Central bank: rba | Type: statement | Date: 2013-12-03

Media Release
Statement by Glenn Stevens, Governor:
Monetary Policy Decision
3 December 2013
At its meeting today, the Board decided to leave the cash rate unchanged at
2.5 per cent.
Recent information is consistent with global growth running a bit below average
this year, with reasonable prospects of a pick-up next year. Commodity prices
have declined from their peaks, but generally remain at high levels by historical
standards. Inflation in most countries is well contained.
Overall, global financial conditions remain very accommodative. Volatility
in financial markets has abated recently. Long-term interest rates remain
very low and there is ample funding available for creditworthy borrowers.
In Australia, the economy has been growing a bit below trend over the past
year and the unemployment rate has edged higher. This is likely to persist
in the near term, as the economy adjusts to lower levels of mining investment.
Further ahead, private demand outside the mining sector is expected to increase
at a faster pace, though considerable uncertainty surrounds this outlook.
There has been an improvement in indicators of household and business sentiment
recently, but it is still unclear how persistent this will be. Public spending
is forecast to be quite weak.
Recent data on prices and wages show inflation consistent with the medium-term
target. The Bank's assessment is that this is likely to remain the case
over the next one to two years.
The easing in monetary policy that has already occurred since late 2011 has
supported interest-sensitive spending and asset values. The full effects
of these decisions are still coming through, and will be for a while yet.
The pace of borrowing has remained relatively subdued overall to date, though
recently there have been signs of increased demand for finance by households.
There is also continuing evidence of a shift in savers' behaviour in
response to declining returns on low-risk assets. Housing and equity markets
have strengthened further over recent months, trends which should in time
be supportive of investment.
The Australian dollar, while below its level earlier in the year, is still
uncomfortably high. A lower level of the exchange rate is likely to be needed
to achieve balanced growth in the economy.
At today's meeting, the Board judged that the setting of monetary policy
remained appropriate. The Board will continue to assess the outlook and adjust
policy as needed to foster sustainable growth in demand and inflation outcomes
consistent with the target.
Dr Christopher Kent
Assistant Governor (Economic)
Phone: +61 2 9551 8800
Dr Guy Debelle
Assistant Governor (Financial Markets)
Phone: +61 2 9551 8200
Media Office
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