Aussie Reserve Bank board minutes for May have "no surprises": economists

Source: Xinhua| 2017-05-16 14:08:21|Editor: Liangyu
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SYDNEY, May 16 (Xinhua) -- The Reserve Bank of Australia (RBA) released its board meeting minutes for the month of May on Tuesday, with a leading Australian economist declaring there were "no surprises" in the report.

At the May meeting, the RBA kept the nation's interest rate on hold at 1.5 percent, with many economists speculating that the rate will remain unchanged until at least 2018.

Kristina Clifton, economist at the Commonwealth Bank, told Xinhua in a note that the rate should remain at 1.5 percent well into 2018, with wages growth also expected to stay in the lower ranges for an extended period of time.

"We expect Wednesday's wage data for the first quarter of 2017 to show that real wages growth is now in negative territory." Clifton said.

However, the leading economist pointed to China as one of the bright spots in terms of Australia's economic performance, and said that overall growth for Australia's trading partners has "picked up."

"In China, growth is being supported by increased spending on infrastructure and property construction. A move towards a higher share of service consumption suggests the Chinese economy is maturing," Clifton said.

This was further evidenced in the meeting minutes, in which Clifton said the RBA noted the positive global momentum as an "upside risk."

Paul Dales, chief economist at Capital Economics, told Xinhua in a statement that the data set from the RBA meeting may suggest that the Australian economy is slightly weaker than they had hoped.

"Building approvals plunged in March, retail sales fell again and today we found out that motor vehicle sales only managed to muster a 0.3 percent month on month rise in April, after having fallen in both the fourth quarter of 2016 and the first quarter of 2017," Dales said.

"We suspect that sharper slowdowns in dwellings investment and consumption will mean that GDP growth will be close to 2.0 percent this year, and 2.8 percent next year, rather than the forecast midpoints of the RBA ranges."

In the minutes, the RBA warned of the growth in housing credit which "continued to outpace growth in household incomes," and said that this creates additional risk as more pressure is applied to people already struggling to make ends meet.

The RBA suggested that further attention be paid to "reinforcing prudent lending standards" and ensuring that those who are taking out loans are indeed able to service them.

"The board continued to judge that developments in the labour and housing markets warranted careful monitoring," the minutes said.

"Taking into account all the available information and the updated forecasts, the board's assessment was that maintaining the current accommodative stance of monetary policy would be consistent with achieving sustainable growth and the inflation target over time."

The next RBA meeting to decide interest rates will be held on June 6, 2017.