Minutes of the RBA from its December 4 Meeting

December 18, 2012 in Australia & New Zealand

The RBA released today the minutes of its Monetary Policy Meeting held on December 4, 2012.

Important observations

The bank reviewed the international economic situation and noted that conditions had turned marginally positive. Growth had stabilised in the Chinese economy due to easing fiscal policy and higher infrastructure spending. In the United States better consumer sentiment, moderate growth in employment and an improving housing market combined to support economic activity. On the other hand, the Japanese economy exhibited export weakness and a contraction in economic growth. Conditions in the Euro area worsened further. Globally commodity prices remained more or less flat over the period after the last meeting.

Domestic economic conditions were marked by slowing consumption growth, modest expansion in employment, a slight recovery in residential construction sector, slowing investments in the mining sector, and slowing growth in business credit overall. The case of wage growth during the second quarter fell with surveys indicating further pressures on wage rates in the near future. Also, leading indicators and available information pointed to a softening labour demand, and therefore muted employment growth in future months.

The members decided to lower the cash rate from 3.25% to 3% based on the following:

  • “The information on labour costs and softening labour market conditions suggested that the inflation outlook still afforded the Board some scope to provide additional support to demand.
  • Further confirmation that the peak in resource sector investment was near, and that the short-term outlook for non-resource investment remained subdued, indicated that there was a case for the Board to provide that support.”


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