Statement by Glenn Stevens, Governor: Monetary Policy Decision - April 2015 | Media Releases | RBA
Central bank: rba | Type: statement | Date: 2015-04-07

Media Release
Statement by Glenn Stevens, Governor:
Monetary Policy Decision
7 April 2015
At its meeting today, the Board decided to leave the cash rate unchanged at 2.25
Moderate growth in the global economy is expected 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 is much lower than it was a year ago. 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.
Prices for key Australian exports have also been falling and therefore Australia's
terms of trade are continuing to decline.
Financial conditions are very accommodative globally, with long-term borrowing rates
for several major sovereigns at all-time lows. Financing costs for creditworthy
borrowers remain remarkably low.
In Australia the available information suggests that growth is continuing at a below-trend
pace, with overall domestic demand growth quite weak as business capital
expenditure falls. 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 rate.
Credit is recording moderate growth overall. Growth in lending to investors in housing
assets is stronger than to owner-occupiers, though neither appears to be
picking up further at present. Lending to businesses, on the other hand,
has been strengthening recently. 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 risen, in part as a result of declining long-term
interest rates.
The Australian dollar has declined noticeably against a rising US dollar over the
past year, though less so against a basket of currencies. Further depreciation
seems likely, 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 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 continue to assess the
case for such action at forthcoming meetings.
Media Office
Information Department