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By Christine Gaylican, Opalesque Asia:
If economic conditions continue positively in the Asia-Pacific, the Reserve Bank of Australia (RBA) may soon implement a more prudent monetary policy.
Since the second half of 2008, governments in the Asia-Pacific region have imposed monetary and fiscal stimulus packages in order to support the demand for commodities, particularly metals.
In Australia, the country’s Reserve Bank of Australia (RBA) said improving conditions are seen but “some uncertainty remains” on the domestic and international fronts, leading to its decision to leave the cash rate on hold.
In the minutes of its September monetary policy meeting (source), the central bank said economic conditions were beginning to promote a "less expansionary policy stance." However, it reiterated a previous concern about prematurely tightening monetary policy.
"At the previous meeting, members had agreed that if the economy continued to evolve as in the latest forecasts, the Bank would in due course need to adopt a less expansionary policy stance," the minutes indicated.
A related report from the Bank of America Securities-Merrill Lynch said that gross domestic product (GDP) in the Asian region had been much stronger than elsewhere, while there were some “upside surprises” in countries such as Germany and France.
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