At the July Reserve Bank of Australia monetary policy board meeting the Bank cut interest rates.

  • Following the cut in the previous month.

Highlights from the minutes of the July meeting:

  • board to adjust policy "if needed" to support growth
  • board to monitor labour market closely, improvement needed to spur wage growth
  • spare capacity likely to remain in labour market for "some time"
  • lower rates to keep AUD lower than would otherwise be the case
  • lower borrowing costs to free up cash for consumer spending
  • Board recognised uneven effect of lower rates on different households
  • extent of spare capacity meant rate cut unlikely to lead to risky rise in borrowing
  • labour demand being met by rise in participation, rather than fall in unemployment rate
  • board saw prospects of lift in household income, support from tax rebates
  • signs of stabilisation in Sydney, Melbourne housing markets
  • funding costs for major Australian banks had reached historic low
  • retail data suggested discretionary spending remained soft in Q2
  • RBA board had detailed discussion on retail competition, impact on inflation
  • board noted significant change in outlook for monetary easing globally, esp US
  • risks from trade disputes remained high, inflation subdued in developed world

Full text of the minutes:

more to come