RBA June monetary policy meeting minutes - says AUD in narrow range despite rising commodity prices

Author: Eamonn Sheridan | Category: Central Banks

Reserve Bank of Australia June 2021 monetary policy meeting minutes 

 Headlines via Reuters:

  •  board agreed it would be "premature to consider ceasing" the bond-buying programme
  • policy would need to remain highly accommodative to reach full employment
  • bond buying underpinned accommodative conditions necessary for economic recovery
  • return to a tight labour market, actual inflation in target band unlikely until 2024 at earliest
  • options for bond programme included another round of a$100 bln, scaling back purchases, spreading them out
  • also discussed approach of reviewing bond purchases more frequently depending on flow of data
  • Australian economy transitioning from recovery to expansion
  • annual wage growth would need to be sustainably above 3% for inflation to reach target
  • members expected only gradual pick up in wages growth over following few years
  • possible participation rate could rise further, still a pool of workers available
  • liaison showed some firms favoured non-wage measures to attract labour, or to ration output
  • household spending to be strong, supported by rising wealth, employment and lower uncertainty
  • A$ in narrow range despite significant increases in some commodity prices
  • monetary policy had contributed to a$ being lower than otherwise
  • RBA board discussed climate change, its impact on cost and availability of funding in Australia

Bolded part on how firms are working to keep wage growth low ... Direct from the minutes:
  • However, firms facing labour shortages were citing a preference for non-wage measures to attract and retain staff, such as one-off bonuses and more flexible working arrangements. Some firms were also opting to ration output because of labour shortages, rather than pay higher wages to attract new workers.
The RBA wants to see quicker wage growth to help spur inflation towards target. The RBA will be lower for longer if inflation (one of the two RBA mandates) does not return to target. 

For background:

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