RBA minutes: Considerable uncertainty about momentum in labour market, still saw excess capacity

The minutes of the December RBA meeting when interest rates held unchanged at 1.5% have been released.

As the RBA minutes notes: “Taking into account the information that had become available over the previous month, and having eased monetary policy earlier in the year, the Board judged that holding the stance of policy unchanged would be consistent with sustainable growth in the economy and achieving the inflation target over time.”

Key headlines (via Reuters)

• Taking into account latest data, judged steady policy right for growth, inflation
• RBA board balancing benefits of low rates against risks to household debt from further easing
• Data suggested Q3 GDP growth would be weaker than expected
• Saw year-ended growth slowing, before picking up to above trend further out
• A rising a$ could complicate economic transition, noted it had recently fallen vs us$
• Inflation expected to stay low for some time before rising to more normal levels
• Housing market had strengthened overall, noted tighter lending rules and higher fixed rates
• Higher commodity prices pointed to another rise in terms of trade for q4
• Drag from mining investment to lessen, export volumes to add to growth
• Members noted international background more positive, still risks to outlook
• Global inflation outlook more balanced than in some time