Statement by Glenn Stevens, Governor: Monetary Policy Decision - October 2015 | Media Releases | RBA
Central bank: rba | Type: statement | Date: 2015-10-06

Media Release
Statement by Glenn Stevens, Governor:
Monetary Policy Decision
6 October 2015
At its meeting today, the Board decided to leave the cash rate unchanged at
The global economy is expanding at a moderate pace, with some further softening in
conditions in China and east Asia of late, but stronger US growth. Key commodity
prices are much lower than a year ago, in part reflecting increased supply,
including from Australia. Australia's terms of trade are falling.
The Federal Reserve is expected to start increasing its policy rate over the period
ahead, but some other major central banks are continuing to ease policy.
Equity market volatility has continued, but the functioning of financial
markets generally has not, to date, been impaired. Long-term borrowing rates
for most sovereigns and creditworthy private borrowers remain remarkably
low. Overall, global financial conditions remain very accommodative.
In Australia, the available information suggests that moderate expansion in the economy
continues. While growth has been somewhat below longer-term averages for
some time, it has been accompanied 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,
with domestic inflationary pressures contained. 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 and
Melbourne, though trends have been more varied in a number of other cities.
Regulatory measures are helping to contain risks that may arise from the
housing market. In other asset markets, prices for commercial property have
been supported by lower long-term interest rates, while equity prices have
moved lower and been more volatile recently, in parallel with developments
in global markets. The Australian dollar is adjusting to the significant
declines in key commodity prices.
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