RBA To Consider Further Monetary Policy Easing If Needed, Minutes Say

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The Reserve Bank of Australia would consider further monetary easing if needed to underpin sustainable growth and inflation and reviewed various unconventional policy loosening measures, according to the minutes of the meeting held in August.

At the meeting, policymakers assessed it appropriate to view the developments in both global and domestic economies before cutting rates further, the minutes said Tuesday.

The bank retained its cash rate at 1.00 percent in August. Earlier, the RBA had reduced the interest rate by 25 basis points in June and July. The back-to-back rate cut was the first since mid-2012.

"Based on the information available and the central scenario that was presented, members judged it reasonable to expect that an extended period of low interest rates would be required in Australia to make sustained progress towards full employment and achieve more assured progress towards the inflation target," the minutes said.

The board discussed the unconventional monetary policy measures, such as very low and negative interest rates, explicit forward guidance and lowering longer-term risk-free rates by purchasing government securities.

Other measures are providing longer-term funding to banks to support credit creation; purchasing private sector assets; and foreign exchange intervention.

Members observed that a package of measures tended to be more effective than measures implemented in isolation.

Finally, it was important for the central bank to communicate clearly and consistently about these measures.

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