Statement by Glenn Stevens, Governor: Monetary Policy Decision - August 2015 | Media Releases | RBA
Central bank: rba | Type: statement | Date: 2015-08-04

Media Release
Statement by Glenn Stevens, Governor:
Monetary Policy Decision
4 August 2015
At its meeting today, the Board decided to leave the cash rate unchanged at 2.0 per
The global economy is expanding at a moderate pace, but some key commodity prices
are much lower than a year ago. Much of this trend appears to reflect increased
supply, including from Australia. Australia's terms of trade are falling
nonetheless.
The Federal Reserve is expected to start increasing its policy rate later this year,
but some other major central banks are continuing to ease policy. Hence,
global financial conditions remain very accommodative. Despite fluctuations
in markets associated with the respective developments in China and Greece,
long-term borrowing rates for most sovereigns and creditworthy private borrowers
remain remarkably low.
In Australia, the available information suggests that the economy has continued to
grow. While the rate of growth has been somewhat below longer-term averages,
it has been associated with somewhat stronger growth of employment and a
steady rate of unemployment over the past year. Overall, the economy is likely
to be operating with a degree of spare capacity for some time yet. Recent
information confirms that domestic inflationary pressures have been contained.
That should remain the case for some time, given the very slow growth in
labour costs. Inflation is thus forecast to remain consistent with the target
over the next one to two years, even with a lower exchange rate.
In such circumstances, monetary policy needs to be accommodative. Low interest rates
are acting to support borrowing and spending. Credit is recording moderate
growth overall, with growth in lending to the housing market broadly steady
over recent months. Dwelling prices continue to rise strongly in Sydney,
though trends have been more varied in a number of other cities. 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 been supported by lower long-term interest rates.
The Australian dollar is adjusting to the significant declines in key commodity
The Board today judged that leaving the cash rate unchanged was appropriate at this
meeting. Further information on economic and financial conditions to be received
over the period ahead will inform the Board's ongoing assessment of the
outlook and hence whether the current stance of policy will most effectively
foster sustainable growth and inflation consistent with the target.
Media Office
Information Department