The Reserve Bank of Australia still believes inflation is under control, according to the minutes of its July meeting, where it decided to keep the official interest rate on hold.
In its minutes, the RBA said the controlled inflation is a sign the domestic economy is continuing to remain strong.
“The weak conditions in parts of the economy for most of the past year – such as retailing and housing – also appeared to have played a role,” the RBA said.
The RBA also said that given the lower inflation rate, it’s appropriate to have the cash rate at just below average, given weaker economic conditions overseas.
“But with a material easing in monetary policy having occurred over the preceding six months or so, and with recent signs that the domestic economy had a little more momentum than had earlier been indicated, members saw no need for any further adjustment to the cash rate at this meeting,” it said.