[ad_1]
The complete statement of the Reserve Bank of Australia – June 4, 2019
At today's meeting, the Board decided to reduce the redemption rate by 25 basis points to 1.25%. The Council made this decision to support job growth and give greater confidence that inflation would be consistent with the medium-term goal.
The outlook for the global economy remains reasonable, although the risks of deterioration resulting from trade conflicts have increased. Growth in international trade remains weak and increased uncertainty is affecting investment intentions in a number of countries. In China, the authorities have taken steps to support the economy while reducing the risks associated with the financial system. In most advanced economies, inflation remains moderate, unemployment rates are low and wage growth has accelerated.
Global financial conditions remain accommodative. Long-term bond yields and risk premiums are low. In Australia, long-term bond yields are at historically low levels. Bank financing costs have also declined, as money market spreads have completely offset increases in the past year. The Australian dollar has been slightly depreciated in recent months and is at the lower end of the narrow range of recent years.
The central scenario points to growth of the Australian economy of around 29% in 2019 and 2020. This prospect is supported by an increase in infrastructure investment and a recovery in the resource sector, partly because of rising prices. Australian exports. The main uncertainties in the domestic market remain household consumption prospects, which are affected by a prolonged period of low income growth and falling housing prices. Household disposable income growth is expected to accelerate, which should support consumption.
Employment growth has been strong over the past year, labor force participation has increased, the vacancy rate remains high and skill shortages have been reported in some areas. Despite these developments, unused capacity in the labor market has made little progress. The unemployment rate remained steady around 5% for a few months, but rose to 5.2% in April. Strong employment growth in recent years has led to an acceleration of wage growth in the private sector, although overall wage growth remains weak. A further gradual increase in wage growth is expected, which would be a welcome development. Taken together, these labor market outcomes suggest that the Australian economy can sustain a lower unemployment rate.
Recent inflation results have been below expectations and point to lower inflationary pressures in most of the economy. Inflation, however, should accelerate and will be boosted in June by rising gas prices. The central scenario remains that core inflation is 1% this year, 2% in 2020 and a little higher thereafter.
The adjustment in established housing markets continues after the sharp rise in prices in some cities. Conditions remain mild, although in some markets the rate of price declines has slowed and auction liquidation rates have increased. Real estate credit growth has also stabilized recently. Credit conditions have been tightened and investor demand for credit has been moderate for some time. Mortgage rates remain low and there is strong competition for borrowers with high credit quality.
The decision taken today to lower the key rate will further strengthen the unused capacity of the economy. It will help accelerate the reduction of unemployment and make safer progress towards the target of inflation. The Commission will continue to closely monitor labor market developments and adjust its monetary policy to support sustainable growth of the economy and the achievement of the inflation objective over the course of the period. time.
[ad_2]
Source link