RBA minutes wrap-up

Today Reserve Bank of Australia (RBA) published the minutes of meeting at 00:30 GMT.

Key highlights -

• RBA recognized slowdown in China, but on a positive note said that with lower steel price, Chinese domestic production can't possibly compete with internationals, whose production costs are lower.

• RBA recognized average growth in Asia, except India, Japanese growth and exports improved over weaker yen and growth in US remains stronger than expected however weakness persist in Euro zone.

• RBA showed concerns over weaker domestic growth and further decline in mining investment. Despite recent pickup in retail sales and higher take up of jobs, income growth remains below historic levels.

• Reduction in interest rates by RBA showing positive effects on disposable income and residential housing market is relatively strong. However commercial housing demand is in decline and office vacancy rates are high in all capital cities.

• RBA takes note of the developments across financial markets and expects the influence of central bankers through monetary policies would continue to move markets and exchange rates further.

• It reiterates the relative strength in Australian dollar in spite of its weakness against dollar.

Analogy -

• RBA is quite concerned over the domestic weakening and would like to help the economy further by reduction of rates. It has plenty of room to do so as current rate stands at 2.25%.
  
  
• RBA is looking for weaker Australian dollar and expects lower exchange rate would balance the risks and help the economy to grow out of current slump.
  
  
• Australian dollar is expected to remain on weaker side and rallies would be opportunities to sell the pair. Aussie is currently trading at 0.766, up 0.25% for the day, against dollar.