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  • 1 year later...

A second major project is the New Payments Platform. This project has been under the guidance of the Reserve Bank's Payments System Board. It is a cooperative effort between the Bank and the payments industry to modernise key parts of our electronic payments system.


When this work is completed we will all be able to make instantaneous payments to one another, with the money transferring between accounts in a matter of seconds, even if the funds have to move between banks. Addressing will be simplified; an email address or a mobile phone number will be able to be used instead of a payer needing to know an account number and BSB. We will also be able to send a lot more information with payments.


The first payments using this new system should be able to be made late next year. As one part of our contribution to this project, the Reserve Bank is building the necessary infrastructure to allow funds to be transferred between financial institutions in real time.



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Media Release

Statement by Philip Lowe, Governor:

Monetary Policy Decision


Date7 August 2018

At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.


The global economic expansion is continuing. A number of advanced economies are growing at an above-trend rate and unemployment rates are low. Growth in China has slowed a little, with the authorities easing policy while continuing to pay close attention to the risks in the financial sector. Globally, inflation remains low, although it has increased in some economies and further increases are expected given the tight labour markets. One uncertainty regarding the global outlook stems from the direction of international trade policy in the United States.


Financial conditions remain expansionary, although they are gradually becoming less so in some countries. There has been a broad-based appreciation of the US dollar over recent months. In Australia, money-market interest rates are higher than they were at the start of the year, although they have declined somewhat since the end of June. These higher money-market rates have not fed through into higher interest rates on retail deposits. Some lenders have increased mortgage rates by small amounts, although the average mortgage rate paid is lower than a year ago.


The Bank's central forecast for the Australian economy remains unchanged. GDP growth is expected to average a bit above 3 per cent in 2018 and 2019. This should see some further reduction in spare capacity. Business conditions are positive and non-mining business investment is continuing to increase. Higher levels of public infrastructure investment are also supporting the economy, as is growth in resource exports. One continuing source of uncertainty is the outlook for household consumption. Household income has been growing slowly and debt levels are high. The drought has led to difficult conditions in parts of the farm sector.


Australia's terms of trade have increased over the past couple of years due to rises in some commodity prices. While the terms of trade are expected to decline over time, they are likely to stay at a relatively high level. The Australian dollar remains within the range that it has been in over the past two years.


The outlook for the labour market remains positive. The vacancy rate is high and other forward-looking indicators continue to point to solid growth in employment. Employment growth continues to be faster than growth in the working-age population. A further gradual decline in the unemployment rate is expected over the next couple of years to around 5 per cent. Wages growth remains low. This is likely to continue for a while yet, although the improvement in the economy should see some lift in wages growth over time. Consistent with this, the rate of wages growth appears to have troughed and there are increased reports of skills shortages in some areas.


The latest inflation data were in line with the Bank's expectations. Over the past year, the CPI increased by 2.1 per cent, and in underlying terms, inflation was close to 2 per cent. The central forecast is for inflation to be higher in 2019 and 2020 than it is currently. In the interim, once-off declines in some administered prices in the September quarter are expected to result in headline inflation in 2018 being a little lower than earlier expected, at 1ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¾ per cent.


Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low. Housing credit growth has declined to an annual rate of 5ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚½ per cent. This is largely due to reduced demand by investors as the dynamics of the housing market have changed. Lending standards are also tighter than they were a few years ago, partly reflecting APRA's earlier supervisory measures to help contain the build-up of risk in household balance sheets. There is competition for borrowers of high credit quality.


The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.

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  • 9 months later...
Although, the bar has been lowered
... the RBA has put financial markets on notice that employment will need to strengthen and the 5 per cent jobless rate gradually fall to avert a future interest rate cut.
- and , the emergency setting?
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Didn't stop them in 2007 or 2013 though (both instances saw a change in government). It's as much a political decision not to cut the rates now as to go ahead and do it, certainly Josh Friedburger is playing it up as a sign the current government is on top of things. The RBA was in a no win situation today but they will cop some flack if they drop the rates in June and then again soon after.
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There is ongoing debate about whether Australia's recession will look like a V, W, L or U. But its profile is clearly not going to fit any simple alphabet shape.


Those sectors of the economy which had to close down were very substantial and we knew the initial hit would be huge. But the Reserve Bank was quick off the mark in responding to the crisis, with its policy initiatives in mid-March.


No matter how effective the stimulus, the productive potential of the economy has been reduced, debt burdens will be higher, some businesses will not revive and precautionary behaviour will persist.


As restrictions are relaxed, there could be a reasonably rapid return towards normality. But the opening-up process was always going to be tentative and experimental.


We already had a good reading of the Reserve Bankâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s thinking from governor Philip Loweâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s speech on April 21: output down 10 per cent in the first half of this year, with recovery starting in the September quarter. Unemployment would register 10 per cent, with many more hidden by the JobKeeper wage subsidy.


Friday's Statement on Monetary Policy provided alternative scenarios that were evenly balanced between optimism and pessimism. Even the optimistic scenario has normality "a couple of years away".


Itâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s not surprising, then, that the RBA hasnâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢t seen the need to tweak the March policy package much.


Conventional policy, the short-term interest rate, was set at effective-zero in March. Forward guidance assured financial markets that this would stay for the duration. Nothing more to do here.


The March package had two more objectives. First, to encourage the banking sector to play a shock-absorber role by funding the cash-flow consequences of business hibernation and recession. Second, to ensure that the government could fund the huge deficit in prospect.


Stephen Grenville is a former deputy governor of the Reserve Bank of Australia and a non-resident fellow of the Lowy Institute

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