The minutes of the April board meeting were released this week and once again they contained little in the way of surprises.
Many of the statements made were repeats of the ones made in the March minutes or very similar in sentiment; “Members judged that there were reasonable prospects for continued growth in the economy” and “very easy monetary policies were continuing to provide support to global demand.”
However, there were though quite a few changes in the “Considerations for Monetary Policy” section. Japan was not mentioned, emerging markets economies were seen as not faring well but advanced economies were acknowledged as having turned the corner; “growth in several advanced economies had led to a further decline in unemployment rates over the past year.”
In past minutes the RBA had commented how the currency “needed to adjust” or “was adjusting”. This time they acknowledged the currency was being driven partly by fundamentals and partly by central bank activities. “The rise in commodity prices had been accompanied by an appreciation of the Australian dollar, which also partly reflected the expectation that US monetary policy would be more accommodative over the coming year than had been anticipated earlier.”
Perhaps of most interest is the addition of a phrase to a statement which has been otherwise unchanged for some months. The sentence “Members judged that there were reasonable prospects for continued growth in the economy” was unchanged from last month but the addition of “with inflation close to target” is surely a tick for interest rate hawks.
Westpac said the key takeaways from the minutes were of an RBA which viewed the domestic economy in a more positive tone, has stronger expectations of continuing low inflation and is concerned by the recent appreciation of the Australian dollar against other currencies. Westpac noted how “the Bank is comfortable with current policy settings…although there are clearly risks around the outlook, particularly vis a vis the AUD.”
Click here for the full version of the April minutes.