RBA Board Meeting: Global Economic Trends, Domestic Conditions, and Market Developments

On 19th December 2023, Minutes of the Monetary Policy Meeting of the Reserve Bank Board published on the official website of Reserve Bank Of Australia. It discusses various aspects, including international economic developments, domestic economic conditions, and international financial markets. Here's a summary:

International Economic Developments:

• Global inflation showed some improvement due to declining headline rates, driven by lower oil prices.
• Output growth in advanced economies slowed, notably in Europe, while the United States experienced more resilience.
• In China, positive indicators supported economic activity, but the property sector showed little improvement.

Domestic Economic Conditions:

• Inflation continued to moderate, influenced by factors such as petrol and holiday travel price declines.
• Wages growth increased, driven by decisions to raise minimum and award wages.
• Labor market conditions remained tight, with employment growth slightly below the working-age population's growth rate.
• GDP growth in Australia remained below trend, impacted by weak household consumption but supported by business investment and public demand.

International Financial Markets:

• Most advanced economy central banks maintained unchanged policy rates since September, emphasizing a need for possible further increases.
• Government bond yields in advanced economies declined, influenced by changing market expectations for policy rates and lower inflation expectations.
• Private funding markets experienced slight loosening, with rising equity prices and declining corporate bond yields.

Australian Dollar:

• The Australian dollar appreciated against the US dollar and on a trade-weighted basis, nearing early-2022 levels.

The overall tone reflects a nuanced economic landscape with both positive and challenging factors at play.

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