Statement by Glenn Stevens, Governor: Monetary Policy Decision - December 2015 | Media Releases | RBA
Central bank: rba | Type: statement | Date: 2015-12-01

Media Release
Statement by Glenn Stevens, Governor:
Monetary Policy Decision
1 December 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 softening in conditions
in the Asian region, continuing US growth and a recovery in Europe. Key commodity
prices are much lower than a year ago, reflecting increased supply, including
from Australia, as well as weaker demand. 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 monetary
policy. Volatility in financial markets has abated somewhat for the moment.
While credit costs for some emerging market countries remain higher than
a year ago, global financial conditions overall remain very accommodative.
In Australia, the available information suggests that moderate expansion in the economy
continues in the face of a large decline in capital spending in the mining
sector. While GDP growth has been somewhat below longer-term averages for
some time, business surveys suggest a gradual improvement in conditions in
non-mining sectors over the past year. This has been accompanied by stronger
growth in employment and a steady rate of unemployment.
Inflation is low and should remain so, with the economy likely to have a degree of
spare capacity for some time yet. Inflation is forecast to be consistent
with the target over the next one to two years.
In such circumstances, monetary policy needs to be accommodative. Low interest rates
are acting to support borrowing and spending. While the recent changes to
some lending rates for housing will reduce this support slightly, overall
conditions are still quite accommodative. Credit growth has increased a little
over recent months, with credit provided by intermediaries to businesses
picking up. Growth in lending to investors in the housing market has eased.
Supervisory measures are helping to contain risks that may arise from the
housing market.
The pace of growth in dwelling prices has moderated in Melbourne and Sydney over
recent months and has remained mostly subdued in other cities. In other asset
markets, prices for commercial property have been supported by lower long-term
interest rates, while equity prices have moved in parallel with developments
in global markets. The Australian dollar is adjusting to the significant
declines in key commodity prices.
At today's meeting the Board again judged that the prospects for an improvement
in economic conditions had firmed a little over recent months and that leaving
the cash rate unchanged was appropriate. Members also observed that the outlook
for inflation may afford scope for further easing of policy, should that
be appropriate to lend support to demand. The Board will continue to assess
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