Members of the Reserve Bank of Australia's monetary policy board felt that the central bank could still allow for additional monetary easing because inflation remains in check, minutes from the bank's June 4 meeting revealed on Tuesday.
The easing might become necessary down the road, the bank said, since domestic growth has remained slightly below trend through the last four quarters.
Global economic activity has been in line with forecasts, the minutes showed.
"Data on global economic activity released over the past month had been broadly consistent with earlier forecasts of around average growth in Australia's major trading partners this year, with growth picking up gradually thereafter," the minutes showed. "Prices of some bulk commodities had declined further in the past month and global inflation had eased somewhat. Financial conditions internationally remained very accommodative."
At the meeting, the RBA left its cash rate at a record low of 2.75 percent, saying that the exchange rate remained elevated despite a sharp depreciation since the previous policy meeting. The board judged that the easier financial conditions now in place will contribute to strengthening of growth over time.
The central bank expects GDP growth to be a bit below trend at around 2.5 percent over 2013. The government forecasts GDP growth of 2.75 percent for 2013-14 and expects growth to accelerate to a pace of 3 percent in 2014-15.
"The best estimate was that growth had been a bit below trend over the past four quarters," the minutes said. "Most recent data were consistent with earlier forecasts of this continuing in the near term. Mining investment appeared to be close to its peak and was expected to remain at a high level for the next year or so, although the exact profile was difficult to predict."
Inflation is expected to be consistent with the medium-term target over the next one to two years. It currently rests at 2.50 percent.
The pace of borrowing has thus far remained relatively subdued, though recently there have been some signs of increased demand for finance by households, the minutes showed.
The bank has reduced the rate by a cumulative 200 basis points since the end of 2011 as the approaching peak in resource investment called for strengthening of demand in other sectors of the economy.
"Interest rates had declined further as a result of the Board's decision at the May meeting," the minutes said. "The exchange rate had also depreciated noticeably, though it remained at a high level considering the decline in export prices that had taken place over the past year and a half. It was possible that the exchange rate would depreciate further over time as the terms of trade declined, which would help to foster a rebalancing of growth in the economy."
Upon the release of the minutes, the Aussie slipped against other major currencies, trading near 0.9547 against the greenback, 90.56 against the yen, 1.1941 against the kiwi and 1.4007 against the euro.
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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.