Well, the innovation that is the
RBA's Board Minutes, which is a practice that only began in December 2007, certainly provides much additional fodder for economic commentators. In times where there is not a great deal of news, or no substantive changes to policy, you have to nevertheless question the value of the blizzard of material that is now published around this event. Don't get me wrong here--regular readers will know that I am a big advocate of more frequent and transparent communications from our central bank. But sometimes I think the economists over-analyse these statements. A short three paragraph summary would more than suffice. In any case, Alex Joiner at ANZ does a good job of summarising one interesting nuance regarding the timing of future hikes:
In the short term, the RBA seem conscious of the risks of raising rates too quickly and the impact that may have on households, especially as fiscal stimulus fades. The RBA cites "mixed" conditions for retailers in October and the possibility that consumer sentiment would be fragile in the short term as rates rise. However, the threat of a more persistent rate of core inflation, despite the "moderation" in labour costs and strong currency, combined with rapidly diminishing spare capacity in the economy present their owns risks to the outlook, with the RBA suggesting "interest rates at a very low level carried its own risks, particularly once the threat of serious economic weakness had passed." To us this argument carries the day while rates remain so low.
Clearly the RBA does think the threat of economic weakness has passed, stating "the growth outlook for the next few years had improved…" and "...that it remained prudent, over time, gradually to reduce the degree of monetary accommodation" Indeed over the medium term, the "trend" rate of GDP growth that resides in the RBA's current forecasts for 2011 and 2012 may be overly cautious given the rate of investment and population growth that may be expected…
Overall, today's November board meeting minutes don't change our view that the bank will lift its target cash rate by 25bp at the December board meeting, although the RBA's statement about the pace of adjustment suggests that a pause in tightening may occur at some point next year.
For mine, I was happy to see the RBA once again refer to
monthly, as opposed to
quarterly, house price data. This is a big change from the past, as far as I can discern. As is their newfound desire to jawbone the supply-side of the market. To quote:
Members discussed developments in the housing market. Monthly measures of housing prices had been broadly flat in September, after strong increases in August. Members noted the weak outlook for construction of apartments, in contrast to the current strong population growth. Among the possible causes discussed were the roles played by tighter lending standards on the part of banks and the costs of new development from the zoning and approvals processes.
