SYDNEY: Australia's central bank has kept the door open to further interest rate cuts but again signalled no urgent need to act because there was a substantial amount of policy stimulus already in place.
In minutes of its Sept. 3 meeting, the Reserve Bank of Australia (RBA) also said a further fall in the local dollar would be helpful in cushioning the economy as mining investment was likely to fall sharply over the next few years.
"Members agreed that the Bank should again neither close off the possibility of reducing rates further nor signal an imminent intention to reduce them," the minutes revealed on Tuesday.
"The Board would continue to examine the data over the months ahead to assess whether monetary policy was appropriately configured."
In a widely expected move, the RBA held its cash rate steady at a record low 2.5 percent this month. It has already slashed a total of 225 basis points off its benchmark rate since November 2011.
The RBA said historically low lending rates, coupled with a softer dollar, would provide plenty of stimulus to an economy that was still growing at a below-potential pace.
It said past rate cuts were yet to be fully felt and over time, the stimulus already in place would help spur other parts of the economy, helping offset a peak in the long mining investment boom.
"Some further decline in the exchange rate would be helpful in achieving such an outcome," it said.
Since the last meeting, however, the local currency has climbed over three US cents, an appreciation unlikely to be welcomed by the central bank.
One sector that has shown a clear improvement thanks to the low interest rates is the housing market, the RBA highlighted.
However, it noted one area of potential concern.
"Property gearing in self-managed superannuation funds was one area identified where households could be starting to take some risk with their finances; members noted that this development would be closely monitored by Bank staff in the period ahead," the minutes showed.
RBA Board members were briefed on developments in the New Zealand housing market and the macroprudential policies recently introduced by the Reserve Bank of New Zealand to curb a housing bubble.
On China, Australia's single biggest export market, the RBA said growth was likely to remain around the Chinese authorities' target of 7.5 percent. Members also noted a pick-up in activity in Japan, while growth in east Asia has also increased.
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