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The Debate Over Global Rate Cuts Is Heating Up
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Members commenced their discussion of domestic economic conditions by assessing the recent data on output growth. They noted that growth had slowed further in the December quarter, largely as expected. Aggregate demand had been supported over 2023 by strong growth in business investment and public spending, and members considered how likely it was this would continue in 2024. Members also noted, however, that household consumption growth had been very weak and negative in per capita terms, as high inflation and increases in interest rates and tax payments had weighed on real incomes. They observed that real household disposable income had begun to grow again and was projected to pick up further as the drag from high inflation abated and pre-announced tax cuts took effect. Members discussed a range of factors that could influence the likelihood that consumption growth would pick up in response. Members observed that growth in underlying demand for housing remained brisk relative to supply, which was contributing to rising prices and rents. On the demand side, population growth remained high and the shift in preferences for more housing space that occurred during the pandemic was yet to unwind, despite worsening affordability. On the supply side, new housing had been constrained by ongoing capacity constraints – particularly for finishing trades and where the required skills were easily transferable to non-residential construction – and rapid increases in construction costs. Advertised rents had continued to grow strongly in most capital cities. Members noted the staff’s overall assessment that aggregate demand had continued to exceed supply in the latter part of 2023, but that the gap between the two was closing relatively quickly, in line with prior forecasts. post: RBA: NO MENTION IN MINUTES THAT BOARD CONSIDERED OPTION TO RAISE RATES post: RBA: WOULD TAKE "SOME TIME" BEFORE BOARD COULD BE CONFIDENT INFLATION RETURNING TO TARGET post: RBA: UPSIDE RISKS TO INFLATION HAD NOT YET MATERIALISED, WHILE CONSUMPTION WAS VERY WEAK post: RBA: OVERALL FINANCIAL CONDITIONS REMAINED RESTRICTIVE, PARTICULARLY FOR HOUSEHOLDS
A resurfaced speech from Chinese President Xi Jinping suggests policymakers may start trading government bonds to regulate liquidity in the market, pushing the nation toward ...
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- Posted: Apr 1, 2024 9:01pm
- Submitted by:Category: Fundamental AnalysisComments: 0 / Views: 2,357