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Financial News: RBA Minutes: Australian Economy Continues To Expand As

RBA Minutes: Australian Economy Continues To Expand As Expected

10/16/2017 - 21:31:00 (RTTNews)

(RTTNews) - Members of the Reserve Bank of Australia said that the country's economy was growing in line with expectations, minutes from the bank's October 3 meeting revealed on Tuesday.

Price pressure remained broadly subdued, the minutes said, thanks in part to a strengthening Australian dollar and a softening greenback.

At the meeting, the bank kept its benchmark lending rate unchanged at the record low 1.50 percent, as expected.

The interest rate has been at this level since September 2016. The bank had reduced the rate by 25-basis points each in August and May last year.

"Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time," the minutes said.

The bank reiterated that the low level of interest rates is continuing to support the Australian economy.

Policymakers also noted more consistent signs of non-mining business investment picking up.

The bank expects inflation to pick up gradually as the economy strengthens. According to RBA, the unemployment rate will decline only gradually over the next couple of years.

An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast. It is also weighing on the outlook for output and employment.

"In Australia, financial conditions for companies remained accommodative, with price-to-earnings ratios above average and corporate bond spreads at a decade low," the minutes said.

On housing market, the bank observed conditions vary considerably around the country. Housing prices have been rising briskly in some markets, while in others they have been declining.

Following some tightening in credit conditions, growth in borrowing by investors slowed a little recently, the bank said.

"The strengthening in global economic conditions had reduced some near-term risks to financial stability arising from rare or extreme events. However, low interest rates and low financial market volatility had promoted financial risk-taking," the minutes said.

Also on Tuesday, the Australian Bureau of Statistics said that the total number of new motor vehicle sales in Australia was down a seasonally adjusted 0.5 percent on month in September, standing at 98,882. That follows the flat reading in August.

On a yearly basis, new motor vehicle sales were down 0.8 percent after climbing 1.7 percent in the previous month.

By individual component, sales for passenger vehicles sank 1.0 percent on month, while sports utility vehicle sales eased 0.1 percent and other vehicle sales advanced 0.7 percent.

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