Reserve Bank of Australia announced on its 1 st May meeting minutes that cutting the interest rate by 50 basis points is a must during the current environment in order to rebound the underestimated economy's growth.
From another side, Reserve Bank of Australia sees that inflation rates will be between 2% and 3% during the coming couple of years, noting that mining sector has significantly rebounded. Adding that China's economy is still weak.
At the same time, the Australian dollar fell with the release of this data to be traded at 99.56 levels, compared with 99.66 levels before the data, while Australian bonds rose after releasing the meeting minutes. RBA sees employment data will keep moderate during the upcoming period.
Governor Glenn Stevens slashed the overnight cash rate by half percent to 3.75% in order to support exports, house prices and slumped consumer confidence, where Australian four biggest banks are trying to guard margins against further erosion from elevated wholesale funding costs.
Australian hose prices fell for a fifth consecutive quarter during the first three months ended in last March, where the demand for housing finance remained weak which pushed on Governor Glenn Stevens and RBA's Monetary policy makers to ease policies in order to support the housing sector wich is strongly related to consumer confidence.
Recently Australia`s economy witnessed a drop in its unemployment rate to a one year low , unlike expectations, as payrolls inclined for the second consecutive month supported by the stronger local currency.
Unemployment rate in April came at 4.9% less than expectations of 5.3%, compared with a previous of 5.2%. Meanwhile, the employment change in April came at 15.5K compared with a previous of 44.0K which was revised to 37.6K, while analysts' expectations were low of -5.0K
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