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

Media Release
Statement by Glenn Stevens, Governor:
Monetary Policy Decision
7 July 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. This trend appears largely 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 over the past year, but at a rate somewhat below its longer-term average.
The rate of unemployment, though elevated, has been little changed recently.
Overall, the economy is likely to be operating with a degree of spare capacity
for some time yet. With very slow growth in labour costs, inflation is 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 stronger borrowing by businesses and 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 has declined noticeably against a rising US dollar over the
past year, though less so against a basket of currencies. Further depreciation
seems both likely and necessary, particularly given the significant declines
in key commodity prices.
The Board today judged that leaving the cash rate unchanged was appropriate at this
meeting. Information on economic and financial conditions to be received
over the period ahead will inform the Board's 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