Reserve Bank: In the minutes from its June meeting when the cash rate was kept on hold at 1.75 per cent, the RBA said measure of both short-term and long-term inflation remain below average, according to Australian Broadcasting Corporation. Low inflation and fears about deflation drove the RBA to deliver an interest rate cut in May, coinciding with the release of the federal budget. Map: Australia The outlook for low inflation and a rising Australian dollar could lay the foundations for another cut in official interest rates, the Reserve Bank has signalled. Reflecting on a world of low inflation and the potential impact here, the RBA said, "monetary policy was very accommodative in the major economies and was expected to remain so given that inflation was below most central bank targets". Consumer inflation in Australia is running at 1.3 per cent well below the RBA target range of 2 to 3 per cent over time. While there has been recent evidence that the transition out of the mining investment boom is occurring, the RBA is seeing "a further sharp fall in mining investment and a decline in non-mining investment in 2016/17". On housing, the RBA noted that while residential building approvals increased strongly in April, this could be balanced by a flood of apartments coming onto the market in the next two years. External Link: Peter Ryan analyses the RBA minutes The RBA says while the Australia dollar had depreciated around 4 per cent against the US dollar, a recent recovery "could complicate the adjustment of the economy to lower terms of trade". The central bank is also watching the labour market and said despite strength seen at the end of 2015 there had been "some moderation" in employment growth this year.
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