The Reserve Bank of Australia released its minutes of the August 7, 2012 meeting on Tuesday morning. This release was highly anticipated by Aussie traders as the minutes could perhaps give some insight as to which way the board may be leaning as far as monetary policy.
As usual, the RBA minutes proved to be the most interesting as the central bank focuses so heavily on the export markets. The commodity rich country can often be thought of as a great barometer for Asian economic health, which in turn can be a great barometer of international growth.
The minutes stated that the members were briefed that the IMF global growth forecasts had been downgraded to 3.5 percent for 2012, and 3.9 percent for 2013, both of which were substantially lower than previously forecasted. The forecast for Australia’s largest trading partners in Asia was still expected to be a full percentage point over the global expectations though. This IMF also stated that the larger risk was to the downside globally.
Members of the RBA stated that they saw the Chinese economy settling into a more sustainable rate of growth, and because of this a rate cut seemed unlikely in Australia at this point. The United States slowed a bit, and the Australians are certainly aware of this. The Europeans are still struggling, and as a result it is unlikely that the growth in Australia will warrant any monetary tightening in the near future.
However, with the Asian economies counterbalancing the weakness in other markets, the central bank looks set to sit still in the near term.