Members of the Reserve Bank of Australia's monetary policy board said that the country's economy continues to see moderate growth, supported by low interest rates, minutes from the bank's April 4 meeting revealed on Tuesday.
Global growth as a whole appeared to be rising, the minutes added, in both developed and emerging economies.
"There had been a significant increase in the growth of global merchandise trade volumes. Data on merchandise imports suggested that stronger demand from east Asia (excluding Japan) and the United States had been an important source of this growth. At the same time, merchandise imports to some other emerging markets had stopped falling," the minutes said.
The board added that the depreciation of the exchange rate since 2013 has also assisted the economy in its transition following the mining investment boom and an appreciating exchange rate would complicate this adjustment.
Headline inflation is expected to pick up this year, the bank said, although underlying inflation is expected to advance at a slower pace.
"Headline inflation had increased in most economies, mainly reflecting higher oil prices over the first part of 2016. Members noted that, while the effect of higher oil prices might dissipate, further reductions in spare capacity in the major advanced economies could be expected to see a lift in inflation," the minutes said.
Growth in household borrowing, largely to purchase housing, continues to outpace growth in household income. Policymakers noted that by reinforcing strong lending standards the risks associated with rising indebtedness could be addressed.
At the meeting, the bank decided to lead its benchmark lending rate unchanged at the record low 1.50 percent. The bank had reduced the rate by 25-basis points each in August and May last year.
"The board judged that holding the stance of monetary policy unchanged would be consistent with sustainable growth in the economy and achieving the inflation target over time," the minutes said.
by RTT Staff Writer
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