Australia's central bank is likely to lower interest rates again to drive increased hiring and boost households' confidence that inflation will return to target.
The Reserve Bank made the comment in minutes of its June 4 policy meeting, released in Sydney Tuesday, when it eased the cash rate to 1.25%, the first reduction in almost three years.
“Given the amount of spare capacity in the labor market and the economy more broadly, members agreed that it was more likely than not that a further easing in monetary policy would be appropriate in the period ahead,” policy makers said.
“They also recognized, however, that lower interest rates were not the only policy option available to assist in lowering the rate of unemployment.” This line likely referred to RBA chief Philip Lowe's speech following the cut, when he said infrastructure investment and structural reforms could help speed economic growth without the downsides of monetary policy.
The minutes suggest the central bank is again homing in on inflation, acknowledging it has remained below target for three years and could start to impact household expectations. When he took the helm in 2016, Lowe said RBA officials aren't “inflation nutters” and were focused on boosting financial system resilience through better lending standards and deflating asset prices.
Source : Bloomberg