The Reserve Bank of Australia (RBA) anticipated a broad cool down in economic growth in the first quarter resulting from weaker consumption growth, the minutes of the latest policy meeting showed.
“Weak growth in retail sales in the March quarter had pointed to a slowing in consumption growth following strong growth in the December quarter,” the official transcript of the June 6 policy meeting revealed Tuesday.
The RBA voted to leave interest rates at a record low of 1.5% at its recent meeting. It marked the tenth straight month that monetary policy has been left on hold.
Australia’s central bank maintained a cautious outlook on the nation’s housing market, remarking on pervasive risks due to rising housing credit. Although the government has taken steps to dull the housing boom, considerable risks remain, especially in capital cities.
In a separate report on Tuesday, the Australian Bureau of Statistics said house prices rose 2.2% in the first quarter, following a 4.1% increase in the final three months of 2016.
That being said, a rate hike to slow property values is not currently feasible as policymakers seek faster economic growth and inflation – two macroeconomic indicators that have largely disappointed as of late. Gross domestic product (GDP) grew at a seasonally adjusted 0.3% in the first quarter, government data showed earlier this month. In annualized terms, that translated into a growth rate of 1.7%.
The Australian government is forecasting GDP growth of 2.75% for fiscal 2017-18, according to last month’s budget. CPI inflation was forecast at 2%.