RBA

Inflation data, due out next week, will steer the next interest rate decision from the Reserve Bank of Australia, minutes show. “The important question for the Board at its next meeting would be whether the new [price] information materially changed the medium-term outlook for inflation,” reads the statement. “Pending this information, the Board judged it appropriate to hold the cash rate unchanged.”

International concerns continue to offset a pretty healthy domestic picture, the minutes show. Policymakers welcomed a moderation in the Asian recovery, but were watching closely to see the scale and speed of the slowdown. And the board discussed at length the issues in Europe, noting that “the coming month would see important announcements about the health of the European banking sector, which had the potential to have a significant impact on financial markets and global confidence.” 

Minutes of the February 2 rate-setting meeting show concerns for the global recovery and domestic credit were mostly behind the surprise decision to keep the cash rate on hold at 3.75 per cent.

Signs of growth in major economies “was currently being supported by the inventory cycle and stimulatory policy settings,” said the board of the Australian central bank. Positive signs for the US were drowned out by concerns for Europe, where household spending continued to fall, and debt levels were high. Plus, “as yet, there was limited evidence of a pick-up in investment in the euro area or Japan.”