The RBA left its official cash rate target unchanged at its September board meeting. The rate at which the RBA wishes banks to lend to each in the market for unsecured overnight loans remained at 1.00%.
Around February of this year, the RBA began to publicly move away from a tightening bias. By April, “there was not a strong case for a near-term adjustment in monetary policy” and, by May, the transformation to an easing bias had taken place. If “there was no further improvement in the labour market in the period ahead….a decrease in the cash rate would likely be appropriate.” A 25bps rate cut was announced in June and another one followed in July.
Since then, the RBA appears to have decided to take a cautious approach. No change was made at the RBA’s August board meeting, nor the meeting in September.
The minutes of the September meeting has now been released and the board’s deliberations focussed on the local labour market, the housing market and GDP growth.
“First, employment had continued to grow strongly and the participation rate was at a record high. However, the unemployment rate had remained steady at around 5.2% over recent months.”
“Second, there had been further signs of a turnaround in established housing markets, especially in Sydney and Melbourne, although housing turnover had remained low.”