Skip to main content

cash rate lowered by 25 basis points to 2.75 per cent, effective 8 May 2013


The global economy is likely to record growth a little below trend this year, before picking up next year.

Among the major regions, the United States continues on a path of moderate expansion and China's growth is running at a more sustainable, but still robust, pace.

Japan has announced significant new policy initiatives aimed at strengthening demand and ending deflation.

The euro area remains in recession. Commodity prices have moderated a little in recent months though they remain high by historical standards. 

Financial conditions internationally continue to be very accommodative, with risk spreads reduced, funding conditions for most financial institutions improved and borrowing costs for well-rated corporates and sovereigns exceptionally low.

Growth in Australia was close to trend in 2012 overall, but was a bit below trend in the second half of the year, and this appears to have continued into 2013.

Employment has continued to grow but more slowly than the labour force, so that the rate of unemployment has increased a little, though it remains relatively low. With the peak in the level of resources sector investment likely to occur this year, there is scope for other areas of demand to grow more strongly over the next couple of years.

There has been a strengthening in consumption and a modest firming in dwelling investment, and prospects are for some increase in business investment outside the resources sector over the next year.

Exports of raw materials are increasing as increased capacity comes on stream. These developments, some of which have been assisted by the reductions in interest rates that began 18 months ago, will all be helpful in sustaining growth. Recent data on prices confirm that inflation is consistent with the target and, if anything, a little lower than expected.

The CPI rose by 2½ per cent over the past year, and measures of underlying inflation gave a broadly similar outcome. These results have been pushed up a little by the impact of the carbon price. Growth of labour costs has moderated slightly over recent quarters while productivity growth appears to be improving.

This should help to lessen increases in prices for non-tradables. The Bank's forecast remains that inflation over the next one to two years will be consistent with the target.

Over recent meetings, the Board has noted that interest rates have already been reduced substantially, with borrowing rates approaching previous lows, and that the effects of this on the economy are continuing to emerge. Savers have been changing their portfolios towards assets with higher expected returns, asset values have risen and some interest-sensitive areas of spending have increased.

The exchange rate, on the other hand, has been little changed at a historically high level over the past 18 months, which is unusual given the decline in export prices and interest rates during that time. Moreover, the demand for credit remains, at this point, relatively subdued. The Board has previously noted that the inflation outlook would afford scope to ease further, should that be necessary to support demand.

At today's meeting the Board decided to use some of that scope. It judged that a further decline in the cash rate was appropriate to encourage sustainable growth in the economy, consistent with achieving the inflation target.
 
Brought to you from RBA

Comments

Popular posts from this blog

Box Hill High School Zone

Parents are struggling with moving into a good reputable school for their kid(s). Here is the zone for Box Hill High School.   Good luck with house hunting!

The Bose Soundbar 700 Won't Connect to App

Bose has one of the best speaker sound. I learnt about Bose more than 25 years ago and still a fan.  I bought Soundbar 700 in 2018.  It took me a while to set it up but it has been giving me troubles once a while.  Recently, I was not able to connect Soundbar 700 with my phone.  Done the factory reset on the soundbar, it didn't work. I spent hours reseting everything multiple times and finally I found this article,  https://www.bose.com.au/en_au/support/articles/HC1380/productCodes/bose_soundbar_700/article.html .  Tweaking them all and finally got it to work again. I think the most important setting is to TURN WPS OFF on the router!  Hope it helps.

Brivis Heater - Error Code #69

My Brivis HX23 Heater broke down this week.  H01 Code #69.  This code was not even listed in the User Manual!  Searching around the web and here is what I found: Secret Reset: This is not in the User Manual.  On the networker controller press FUNCTION > 1 > 4 keys and the screen will go blank and come back on after 30 seconds, this has rebooted the main PCB and reset the fault code. Use this with caution as too much gas build up could cause an explosion. Use it only after the unit has enough time to air out the gas build up. What is Code #69 or any other unpublished codes?  The best way to find out is to open up the heater unit.   There is a little LCD on the PCB showing what error exactly is. (Note: Opening up the unit may void your warranty.)