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RBA Says Stronger U.S. Growth, Lower Aussie Could Boost Economy


Tuesday, 21 August 2018 09:14 WIB

AustraliaRBAReserve Bank of Australia


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Australia's central bank sketched out a scenario where faster global growth and U.S. stimulus withdrawal push the Aussie dollar lower and underpin a stronger outlook Down Under.

In minutes of their Aug. 7 meeting released in Sydney Tuesday, policy makers also noted that while the direct impact of trade protectionism was likely to be small, the risk to investment and confidence had increased.

RBA noted that higher household income, combined with a minimum wage increase, tax cuts in the offing and a tightening labor market reduced some of the uncertainty around consumption.

Reiterated there was no strong case for a near-term policy adjustment and that while progress in reducing unemployment and lifting inflation was likely to be “gradual,” the next move was more likely to be up rather than down.

Australian dollar was little changed at 73.47 U.S. cents at 11:39 a.m. in Sydney.

The Reserve Bank of Australia has played an anchor role in the economy for the past two years, standing pat at a record-low 1.5 percent cash rate. It has sought to be a source of stability and confidence that boosts hiring and eventually encourages wage growth. While the labor market has tightened during the period, the transition has proven more protracted than expected and traders see little chance of a rate hike in the next 12 months.

Source: Bloomberg


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