FXStreet (Delhi) – Felicity Emmett, Co-Head of Australian Economics at ANZ, notes that the recently published minutes of the RBA showed that the members are uncertain about the outlook of the Australian economy, given increased turbulence in international financial markets.
Key Quotes
“The September RBA Board meeting followed a period of substantial turbulence in international financial markets, and as such the focus of today’s minutes was always going to be on the comments on the international environment. Not surprisingly, the verdict from the minutes is “overall, international economic developments had increased the downside risks to the outlook”.”
“But the minutes also note the increased uncertainty surrounding the outlook – noting that “it was too early to assess the extent to which this would materially alter the forecast for GDP growth in Australia’s trading partners”. And on China, “the recent volatility in Chinese equity markets was not expected to have a significant direct effect on the near-term economic outlook” and “it was too early to assess accurately the effect of several recent policy changes designed to support activity”. On the whole, it seems that impact on the Australian economy of the recent global developments is difficult for the RBA to fully gauge at the moment.”
“Consistent with the post-meeting statement, there was very little change to the language or tone of the comments on the domestic economy. Overall, the minutes suggest an increased level of uncertainty about the outlook, particularly on the international front. Given that growth remains soft, and the data very patchy, we continue to expect the cash rate to remain on hold, although recent developments suggest that the risks have further tilted towards lower rates.”
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