Members of the Reserve Bank of Australia's monetary policy committee felt that the Australian economy was growing at trend, minutes from the board's September 5 meeting revealed on Tuesday.
The members further noted a sharp fall in commodity prices, which figures to affect the Australian economy - although the effect of the current monetary policy continues to be successful.
"Of particular note this month was the recent sharp decline in some bulk commodity prices," the minutes said. "At the same time, though, the domestic economy appeared to be growing at around trend pace and there were signs that the effects of earlier reductions in the cash rate were still working their way through the domestic economy."
They also agreed that conditions were slowing on other parts of the world - particularly China - although the U.S. economy had shown signs of slight improvement.
"Information that became available over the past month pointed to slightly softer conditions in many parts of the global economy," the minutes said. "Ongoing weakness in the advanced economies appeared to be weighing on exports from Asia, although a number of indicators of activity for the U.S. economy were a little more positive over the past month. A month earlier, members had noted that there were some tentative signs that Chinese growth might be stabilizing at a more sustainable pace."
At the meeting, the RBA kept its benchmark cash rate unchanged at 3.50 percent for a third consecutive month - calling the current monetary policy stance "appropriate."
The decision was in line with forecasts. The RBA reduced the cash rate by 50 basis points in May and by a quarter-point in June, following two back-to-back rate cuts towards the end of 2011.
Even after a cumulative 125 basis point reduction in cash rate since November last year, Australia has the highest borrowing costs among the developed economies.
"The current assessment of the inflation outlook continued to provide scope to adjust policy in response to any significant deterioration in the outlook for growth," the minutes said. "At this meeting, the Board judged that, with inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the stance of monetary policy remained appropriate."
Upon the release of the data, the aussie slipped further against major counterparts, trading near 1.0443 against the U.S. dollar, 1.2546 against the euro, 1.2676 against the kiwi and 82.07 against the yen.
by RTT Staff Writer
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