MNI BRIEF: RBA Minutes Detail China Concerns

The Reserve Bank of Australia board noted a sharper slowing China and high oil prices as key international developments that warranted closer attention, according to the published minutes of the Sept 5 meeting.

Members noted Chinese tourist and student numbers had recovered but were not back to pre-pandemic levels, while a sharper deterioration in China’s economic growth posed downside risk to exports and could reduce prices for Australia’s commodities, the board noted.

“Lower output growth in China would also affect global output growth, which might in turn affect a range of Australian exports as well as the prices of Australia’s imports,” the minutes stated. “However, if this downside risk were to eventuate, these effects would likely be partly offset by a depreciation of the Australian dollar.”

The board choose to hold the cash rate at 4.1% this month, the third consecutive pause, and noted it was monitoring the developing situation in China’s property market. (See MNI RBA WATCH: Rates Held; Services, China Caution Noted)

The minutes show the board's concerns focused on the deterioration in China’s property market and its potential implications for the broader economy and financial system. “Households in China hold a significant share of their wealth in housing assets, and weakness in the property sector may be affecting households’ confidence and spending,” the board noted.

The Board will next meet Oct 3.