RBA meeting minutes may not reflect current conditions: CBA

RBA meeting minutes may not reflect current conditions: CBA
RBA meeting minutes may not reflect current conditions: CBA

The Reserve Bank's September board minutes "look a little dated", according to the Commonwealth Bank of Australia.

The board meeting, held earlier this month, came before the latest national data on retail trade, building approvals, housing finance, employment and GDP.

The Commonwealth Bank's latest Global Markets Research economics update claims recent data show that Australia's economy is faring better than the Reserve Bank (RBA) expected.

Since the board's meeting, the Australian dollar has dropped by about 4 US cents. If the Australian dollar's decreased value remains unchanged, the Commonwealth Bank expects that the Reserve Bank will upgrade its forecasts for growth and inflation.

The board noted that labour market conditions "had remained subdued", but employment figures released last Friday show a 121,000 increase in employment, with the unemployment rate falling by 0.3 percentage points, from 6.4% to 6.1%.

"Cutting through the monthly noise shows that trend employment growth is running at 20k on a three-month basis," states the Commonwealth Bank update.

"Employment growth around this level is in line with a flat unemployment rate.  

"And coupled with the positive leading indicators suggests that the RBA is, in [The Commonwealth Bank's] view, being overly pessimistic in its assessment of the jobs market.

"The risk is that the unemployment rate starts to decline ahead of the RBA’s expectations."

In the Reserve Bank's September minutes, the board also highlighted recent Australian property price growth, stating that "additional speculative demand could amplify the property price cycle and increase the potential for property prices to fall later."

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