RBA Minutes: Monetary Policy 7 Dec 2021

Short summary:

• No change to policy rate
• “overall funding costs for banks remained historically low, despite yields on bank bonds having risen in recent months.”
• “Commitments for new business and housing loans remained at high levels, although they had declined for owner-occupiers, including first home buyers.”
• RBA considering a range of bond purchasing options, include tapering from Feb to ceasing purchases mid Feb.
• Economic “activity was rebounding strongly from the setback in the September quarter”.
• “firms’ investment intentions were at, or above, average levels for most industries”
• “the household saving ratio increase sharply to a historically high level of around 20 per cent. This added further to the large amount of savings accumulated since the onset of the pandemic.”
• “Leading indicators of labour demand pointed to a strong recovery in labour market conditions in coming months, with job advertisements rising to a historically high level.”
• “Current market pricing implied the cash rate was expected to be close to 1 per cent by the end of 2022, before rising to a little below 1¾ per cent by the end of 2023.”
• “Some timely indicators of price pressures in global supply chains, including shipping costs and prices for key intermediate inputs, had shown signs of stabilising of late”
• “[I]n the United States and the United Kingdom, nominal wages growth was running at its fastest pace in some years. However, similar to the Australian experience, nominal wages growth had remained subdued in the euro area and in Canada.”
• New Zealand, South Korea and Norway increased their policy rates.

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