CANBERRA: Australia’s central bank said the weak economic growth numbers for the second quarter were not a surprise and members noted a number of activity indicators had shown some improvement in recent months.
The latest comments, in minutes of the Reserve Bank of Australia’s Sept. 1 policy meeting, were likely to cement the view that the central bank has shifted to a wait-and-see stance. The RBA kept the cash rate steady at a record low 2.0 percent this month and said the “Board judged that it was appropriate to leave the cash rate unchanged.”
The decision was made a day before data showed gross domestic product rose a mere 0.2 percent in the second quarter, taking the annual growth rate down to 2.0 percent – well below the 3.0-3.25 percent average pace.
“Following the strong outcome in the March quarter, GDP growth in the June quarter was expected to be weak, partly reflecting a fall in resource export volumes as a result of temporary disruptions to production,” the bank said.
“GDP growth was expected to remain below average in year-ended terms, but members recognized that a number of indicators of domestic economic activity had shown some improvement over recent months.” On the housing market, the RBA said recent measures to crimp lending to potentially riskier investors were showing signs of working.
“There were indications that the measures implemented by APRA had slowed the growth in lending for investment housing,” it said. “The Bank was continuing to work with other regulators to assess and contain risks that may arise from the housing market.” The minutes also revealed that members discussed at length about the recent global stock market volatility and developments in China, including the depreciation of the yuan.
“In China, data on economic activity in July suggested that growth had continued to ease. Members noted that this presented downside risk to the overall outlook for growth in China over the coming year,” the RBA said. “Members noted that the recent volatility in Chinese equity markets was not expected to have a significant direct effect on the near-term economic outlook.”
