RBA Minutes March 2015 (edited)

Fill the gaps in this heavily edited version of the RBA Minutes of its March 2015 Board Meeting. A good exercise to familiarise yourself with the forces impacting on the economy in March 2015

Fill in all the gaps, then press "Check" to check your answers. Your goal should be to achieve 100% for each question.
Considerations for Monetary Policy

In assessing the appropriate stance for policy in Australia, members noted that the outlook for global growth had not changed, with Australia's major partners forecast to grow by around the average of recent years in 2015. Lower prices were expected to boost growth in major trading partners and reduce temporarily. More generally, although the decline in many prices over the past year had largely been in response to expansions in global , members observed that demand-side factors, including the weakness in Chinese property markets, had also played a role. Although the Australian dollar had d, particularly against the US dollar, it remained above most estimates of its f value, particularly given the significant declines in key commodity prices. Conditions in global financial markets remained very accommodative. Changes to the se of monetary policy by the major central banks were likely to be important influences on financial markets over the coming year.

Data available at the time of the meeting suggested that the Australian economy had continued to grow at a below-trend pace in the December quarter and that domestic demand growth had remained weak overall. There had been some evidence suggesting that growth of dwelling and consumption had picked up in the December quarter, but there had also been indications that business investment could remain subdued for longer than had been previously expected. On balance, the evidence suggested that labour conditions were likely to remain subdued and the economy would continue to operate with a degree of spare capacity for some time. As a result, pressures were expected to remain contained and inflation was forecast to remain consistent with the target over the next year or so, even with a lower e rate.

At the same time, activity in the market had remained strong. Housing prices had continued to increase strongly in Sydney and at a solid pace in Melbourne. In other capital cities, trends had been more mixed and annual increases in capital city housing prices (excluding Sydney and Melbourne) had averaged about 3 per cent. Growth of dwelling was estimated to have picked up in the December quarter and was expected to remain at a high level in the near term. While credit had continued to grow a little faster than incomes, household l had not increased significantly and the Bank would continue to work with other regulators to assess and contain risks that might arise from the housing market.

Members noted that the current setting of monetary policy had been a for some time and that the recent reduction in the cash rate would provide some further support to the . They also acknowledged that a lower rate would help achieve balanced growth in the economy. Nonetheless, on the basis of the current forecasts for growth and , members were of the view that a case to ease policy further might emerge.

In considering whether or not to reduce the cash further at this meeting, members saw benefit in allowing some time for the structure of rates and the economy to adjust to the earlier change. They also saw advantages in receiving more data to indicate whether or not the economy was on the previously forecast path. Further, they noted the greater degree of uncertainty about the behaviour of borrowers and s in a world of very low interest rates. Taking account of all these factors, members judged it appropriate to hold the cash rate steady for the time being, while recognising that further easing over the period ahead may be appropriate to foster sustainable growth in while maintaining inflation consistent with the target.

The Decision

The Board decided to leave the cash rate unchanged at per cent.