Wednesday, 22 January 2020
Jakarta
--:--
Tokyo
--:--
Hongkong
--:--
New York
--:--
RBA Monitoring Job Market Closely, to Adjust Rates If Needed
Tuesday, 16 July 2019 08:53 WIB | FISCAL & MONETARY |RBAEkonomi Australia

Australia's central bank is focused on the jobs market and said it will adjust policy if needed to support economic growth and keep inflation on track to return to target.

In minutes of its July 2 meeting, when it cut interest rates for a second month to a record-low 1%, the Reserve Bank noted wages growth remained low overall and œspare capacity was likely to remain in the labor market for some time.

The easing would œpromote stronger overall economic conditions, it said Tuesday. œThe extent of spare capacity in the economy, and the likely pace at which it would be absorbed, meant that a decline in interest rates was unlikely to encourage and unwelcome material pick-up in borrowing by households. 

Governor Philip Lowe executed the first back-to-back rate cuts in seven years in June-July, citing the bank's estimate that unemployment could fall to about 4.5% before triggering faster inflation. He had kept the cash rate on hold for almost three years prior in an effort to deflate a property bubble and discourage heavily-indebted households taking on more leverage.

While the RBA has conceded rate cuts at this level show diminishing returns, it expects the two reductions to lower the currency's level and free up cash for consumers and firms. Yet the former is in increasing doubt as major central banks from Washington to Tokyo to Brussels are also now easing, and not everyone can have a weaker exchange rate.

Board members noted œthe significant change in the expected path of monetary policy around the world, particularly in the U.S., the minutes said.

While the RBA is looking to push down unemployment from the current 5.2% level, it also acknowledged that forward-looking indicators suggest employment growth œwould moderate over coming months. While Australia has enjoyed a jobs boom in the past two years, it has been absorbed by a higher participation rate rather than a lower unemployment rate.

The RBA noted the jobless rates in major advanced economies were at œhistorically low levels and yet this had failed to translate into faster inflation, as Australia is also finding.

The bank reiterated in its concluding paragraph: œthe board would continue to monitor developments in the labor market closely and adjust monetary policy if needed to support sustainable growth in the economy and the achievement of the inflation target over time.

Growth slowed in recent quarters under as households reined in spending in response to falling property prices. These have begun to stabilize and the RBA's bullish case is that a combination of this, interest-rate and tax cuts, infrastructure expansion and renewed resource investment will revive the economy.

Source : Bloomberg

RELATED NEWS
BoE Could Give "Prompt Response" to Signs of Lasting Weakness in UK Economy - Carney...
Thursday, 9 January 2020 17:07 WIB

Bank of England Governor Mark Carney said on Thursday there could be a "relatively prompt response" from the central bank if it looked like weakness in the economy will persist. "With the relatively ...

Bank of England leaves policy rate unchanged at 0.75% in December as expected...
Thursday, 19 December 2019 19:47 WIB

In a widely expected decision, the Bank of England's Monetary Policy Committee held the policy rate unchanged at 0.75% in December. The asset purchase facility remained steady at €435 billion as wel...

Lagarde's ECB Keeps Policy Unchanged as Strategy Review Looms...
Thursday, 12 December 2019 20:05 WIB

The European Central Bank kept monetary stimulus unchanged at President Christine Lagarde™s first policy meeting, shifting the focus to when she™ll announce her review of the instit...

Federal Reserve signals no rate hikes in 2020, just one in 2021...
Thursday, 12 December 2019 02:20 WIB

The Federal Reserve left its benchmark interest rate unchanged and signaled no changes next year after its latest meeting to evaluate the economy. The Fed's so-called dot plot shows no rate hikes in ...

Australia Holds Rate as RBA Waits for Past Cuts to Flow Through...
Tuesday, 3 December 2019 10:56 WIB

Australia™s central bank kept interest rates unchanged as it waits for three cuts since June to flow through to areas of the economy beyond the property market. Reserve Bank Governor ...

LATEST NEWS
Yen supported, yuan frail on coronavirus concerns

The yen was supported while the yuan was on the back foot on Wednesday as investors tried to assess the risk of the outbreak of a new coronavirus in China disrupting the country™s economy and trade partners. The virus, which causes a type of...

Tokyo stocks open lower on virus woes

Tokyo stocks opened slightly lower on Wednesday with investor sentiment dampened by fears over the growing spread of a new SARS -like virus. The benchmark Nikkei 225 index edged down 0.06 percent or 15.46 points to 23,849.10 in early trade while...

Hong Kong Stocks Slump After Credit Downgrade (Review)

Hong Kong shares plunged on Tuesday after Moody's downgraded the city's credit rating, while tourism-linked firms were hit by fears over a SARS -like virus that has spread from China to other countries. The Hang Seng index tumbled 2.81 percent, or...

POPULAR NEWS
Gold Edges Higher After IMF Shaves World Growth Forecast
Monday, 20 January 2020 20:50 WIB

Gold prices drifted fractionally higher on Monday as U.S. markets remained closed for the Martin Luther King holiday while European ones were...

Wall Street, Main Street expect gold price uptrend to continue
Monday, 20 January 2020 10:52 WIB

Wall Street and Main Street alike look for gold to continue the recent bounce this...

Gold Gains on Yemen Attacks, China Lunar New Year Buying
Monday, 20 January 2020 17:44 WIB

Gold prices rose to their highest in more than a week on Monday, after a missile attack in Yemen over the weekend fanned geopolitical concerns and...

Gold Settles Lower as Traders Weigh The Impact of China's Coronavirus on Demand for The Metal
Wednesday, 22 January 2020 01:56 WIB

Gold futures settled modestly lower on Tuesday, with some sources attributing the loss to the possibility that a viral outbreak may cut demand for...