RBA July meeting minutes - Easy policy to stay as long as needed

Author: Eamonn Sheridan | Category: Central Banks

Minutes of July 2020 Monetary Policy Meeting of the Reserve Bank Board

Headlines via Reuters 
  • target for three-year yields to be maintained until progress made towards full employment, inflation
  • members agreed that there was no need to adjust the package of measures in Australia in the current environment
  •  accommodative approach will be maintained for as long as necessary
  • likely that fiscal and monetary support would be required for some time
  • members agreed to continue to assess the evolving situation in Australia and did not rule out adjusting the current package if circumstances warranted
  • have not purchased government bonds for some time, prepared to scale up purchases again, if necessary
  • uncertainty about the future path of the economy as well as the health situation was continuing to affect the consumption and investment plans
  • members agreed that negative interest rates in Australia remain extraordinarily unlikely.
  • agreed there is no case for intervention in the foreign exchange market, given its limited effectiveness when the exchange rate is broadly aligned with its fundamental determinants, as at present
  • economic conditions have stabilised and downturn has been less severe than earlier expected
  • global economic outlook remained uncertain and would depend upon containment of the virus
  •  the nature and speed of the economic recovery remained highly uncertain
  • Australian economy was experiencing the biggest economic contraction since the 1930s
  • members agreed that the bank's policy package was continuing to work broadly as expected
  • the nature and speed of the economic recovery in australia remained highly uncertain
  • bank's policy package was working broadly as expected
  • consumer spending in May and June had been stronger than expected
  • fiscal policy was playing a key role in supporting economic activity and the labour market in Australia
  • government assistance - particularly the Jobkeeper and Jobseeker programs - was playing an important role in supporting household incomes and consumption

Full text: 

The minutes are not indicating an RBA that is perturbed, they assess what is being done is enough. However, do take note that this meeting was held prior to Melbourne going back into lock down and the picture for the recovery has darkened (in the sense that shutting down a fifth of the country will slow recovery) since then. 

Stay tuned for this still to come, due at 0300GMT:
  • Philip Lowe, RBA Governor, speech - COVID 19, the Labour Market and Public-sector Balance Sheets

Minutes of July 2020 Monetary Policy Meeting of the Reserve Bank Board

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