Auctioneer James Hurley during the auction of 11 Frazer St, Dulwich Hill, which sold for $1.4 million. The central bank said it did consider the very strong Sydney and Melbourne housing markets at its June meeting.
THE Reserve Bank will keep a close watch on the economy in the coming months to assess whether more interest rate cuts are needed, as economic growth and business investment remains sluggish.
The RBA cut the cash rate to a historic low of two per cent in May, before leaving rates on hold at its June 2 meeting.
In the minutes of that meeting, released on Tuesday, the bank said its board had determined “it was appropriate to leave the cash rate unchanged and to assess information on economic and financial conditions as it become available”.
“These data would inform the board’s assessment of the state of the economy and the outlook and hence whether the current stance of policy would most effectively foster sustainable growth and inflation,” the RBA said.
It said monetary policy should be “accommodative” in the context of the current domestic and international economic environment. This fits with comments made by RBA governor Glenn Stevens last week that the central bank was open to further move on rates, if necessary.
In the minutes, the central bank pointed to “output growth” as a key area of concern impacting monetary policy, saying it was expected to continue below trend until late 2016.
It also highlighted spare capacity in labour and product markets, as well as weak business investment.
“The available data suggested that private business investment had declined further in the March quarter,” the RBA said.
The central bank said it did consider the very strong Sydney and Melbourne housing markets at its June meeting, while also noting price trends in other cities were more mixed.
On the positive side, the minutes reveal the RBA believes growth in China has picked up slightly, and that the US Federal Reserve is likely to hike rates some time in 2015.
The RBA also said the Australian dollar “was close to the lowest levels seen earlier this year”.
The local currency was relatively unmoved by the release of the RBA’s minutes, trading at 77.64 US cents at 1140 AEST.
The release of the minutes comes after RBA assistant governor for economics Christopher Kent on Monday said monetary policy was “clearly working” to support demand, in the face of a steep drop in mining investment and fiscal consolidation by state and federal governments.