Members of the Reserve Bank of Australia's monetary policy board decided that it was appropriate to trim the nation's benchmark interest rate in order to spur economic growth, minutes from the RBA's May 8 meeting revealed on Tuesday.
Economic growth is expected to come in slightly below trend, the RBA said, strengthening the case for a rate cut.
"Data on the global economy had been somewhat mixed and commodity prices had declined," the minutes said. "Even so, growth of Australia's trading partners was still expected to be around average this year, before picking up gradually next year."
An extended forecast for low inflation sealed the deal, the bank said.
The bank maintained its outlook on prices, saying inflation over the next one to two years will be consistent with its target. However, the RBA expressed concerns over the unusual strength in the currency.
"The board had considered that the inflation outlook provided scope to ease monetary policy further, should that be necessary to support demand," the minutes said. "Members recognized that the effects of the earlier reductions in interest rates were still working through the economy."
At the meeting, the RBA cut rates by 25 basis points, from 3.00 percent to a record low 2.75 percent. Most economists had expected the bank to keep the rate unchanged for a fourth straight month.
The RBA started its easing cycle in November 2011 and has reduced the rate by a cumulative 200 basis points since then.
The bank also noted that as the peak in the level of resources sector investment is likely to occur this year, there is scope for other areas of demand to grow more strongly over the next couple of years.
The growth in Australia was a bit below trend in the second half of 2012 and this trend have continued into 2013, the RBA said. However, the bank was upbeat on consumption, dwelling investment, business investment as well as exports.
"Taking all the factors into consideration, the Board decided that some of the scope to ease policy should be used at this meeting," the minutes said. "It judged that a further reduction in the cash rate was appropriate to encourage sustainable growth in the economy, consistent with achieving the inflation target."
Also on Tuesday, the Conference Board's Index of Leading Economic Indicators for Australia increased by 0.1 percent in March, the Board said, marking the third straight monthly leading index gain.
The board said gains from building approvals, money supply and the yield spread more than offset a negative contribution from stock prices.
The board's Coincident Index, which measure current conditions, increased 0.2 percent.
Upon the release of the data, the aussie slipped against other major currencies, trading at 0.9755 against the greenback, 100.20 against the yen, 1.1980 against the NZ dollar and 1.3187 against the euro.
For comments and feedback contact: editorial@rttnews.com
Economic News
What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.