CANBERRA, Jul. 20 -- Reserve Bank of Australia (RBA) on Tuesday released its minutes for the latest board meeting, revealing a greater concern with the global economy and less emphasis on the need for domestic interest rate rises.
In the minutes from its July board meeting, RBA said debt problems in the euro-zone are a bigger threat to global growth than first though.
Also, the minutes said the central bank's forecast for robust Australia's economic growth in 2011 of 4.25 percent is unlikely to be achieved, noting key coal exports are being slow to rebuild after widespread flooding earlier in the year, while consumer spending remains weak and demand overall shows little sign of a pick-up.
The RBA said its monetary policy remains appropriate, giving no indication of the likelihood of a rate cut that has been predicted by some economists, nor an increase in the cash rate.
"The flow of recent information suggested both that there was more time to assess the likely strength of inflationary pressures in Australia and it would be prudent to use that time," the minutes said.
According to Paul Bloxham, HSBC chief economist chief economist for Australia and New Zealand, the tone of the minutes has shifted from previous communications, to a more 'wait and see' approach to policy.
"Given concerns about rising inflation, we remain of the view that the next move from the RBA is up, not down," Bloxham said in a statement.
However, he does not expect an increase until sometime in the final three months of the year, given the recent wobbles in the global economy and weaker domestic sentiment.
Meanwhile, RBA indicated next Wednesday's release of the June- quarter consumer price index "would be important in helping to shape views about inflation and therefore the future path of interest rates.
Economists surveyed by Dow Jones Newswires also expect core inflation to rise 0.7 percent over the quarter, not enough to trigger a hike in rates just yet.
The RBA board has left the official cash rate at 4.75 percent since last lifting it November 2010. The board will next meet on the first Tuesday of August.