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RESERVE BANK OF AUSTRALIA

Statement on Monetary Policy – August 2006

List of tables

Table 1: World GDP

Table 2: Changes in Monetary Policy

Table 3: Changes in Major Country Share Prices

Table 4: Change in US Dollar against Other Currencies

Table 5: Australian Dollar against Selected TWI Currencies

Table 6: Demand and Output

Table 7: House Prices

Table 8: Fiscal Balance – General Government Sector

Table 9: Labour Market by State

Table 10: Commodity Prices

Table 11: Intermediaries’ Indicator Lending Rates

Table 12: Housing Loan Interest Rates

Table 13: Financial Aggregates

Table 14: Non-government Bond Issuance by Sector

Table 15: Measures of Consumer Prices

Table 16: Output Prices at Different Stages of Production

Table 17: Median Inflation Expectations

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Table 1: World GDP
Year-average percentage change(a)
  2004 2005 2006 2007
      Consensus forecasts
(July 2006)
(a) Aggregates weighted by GDP at PPP exchange rates unless otherwise specified
(b) Weighted using market exchange rates
(c) Weighted using merchandise export shares
Sources: CEIC; Consensus Economics; IMF; RBA; Thomson Financial
United States 3.9 3.2 3.5 2.8
Euro area 1.8 1.4 2.2 1.8
Japan 2.3 2.6 3.0 2.2
China 10.1 9.9 9.7 8.8
Other east Asia(b) 5.9 4.8 5.2 4.8
India 7.3 8.2 7.6 7.2
Latin America 5.8 4.3 4.7 4.1
Emerging Europe 6.1 5.2 5.8 5.5
World 5.3 4.7 5.0 4.6
Australia’s trading partners(c) 4.9 4.4 4.6 4.1
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Table 2: Changes in Monetary Policy
  Current level
 Per cent
 Most recent
change
 Market expectations
for next 6 months
Sources: central banks; Bloomberg; Reuters
United States 5.25 ↑ Jun 06 No change
Euro area 2.75 ↑ Jun 06 ↑ 50 bps
Japan 0.25 ↑  Jul 06 ↑ 25 bps
United Kingdom 4.50 ↓ Aug 05 ↑ 25 bps
Canada 4.25 ↑ May 06 No change
New Zealand 7.25 ↑ Dec 05 No change
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Table 3: Changes in Major Country Share Prices
Per cent
  Since
2000
peak
 2006 to
date		 Since
previous
Statement
Source: Bloomberg
United States
– Dow Jones −5 4 –2
– S&P 500 −17 2 −3
– NASDAQ −59 −6 −11
Euro area
– STOXX −27 4 −5
United Kingdom
– FTSE −15 5 −2
Japan
– TOPIX −11 −5 −10
Canada
– TSE 300 5 6 −2
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Table 4: Change in US Dollar against Other Currencies
Per cent
  2006
to date		 Since previous
Statement
Source: RBA
Sweden −10 −2
United Kingdom −8 −1
Thailand −8 0
Euro area −8 −1
Indonesia −7 4
Switzerland −7 0
Brazil −6 7
South Korea −5 2
Singapore −5 0
Australia −4 1
Philippines −3 0
Malaysia −3 2
Canada −3 2
Japan −3 2
China −1 0
Taiwan 0 4
India 3 4
Mexico 4 1
South Africa 10 15
New Zealand 10 3
Majors TWI −5 1
Broad TWI −3 1
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Table 5: Australian Dollar against Selected TWI Currencies
Per cent
  2006
to date		 Since previous
Statement
Source: RBA
New Zealand 16 3
South Africa 15 15
Taiwan 5 4
US 5 0
China 3 −1
PNG 3 −1
Japan 2 1
Canada 2 3
Philippines 1 0
South Korea −1 2
Singapore −1 0
Switzerland −2 −1
Euro area −3 −1
Indonesia −3 4
UK −4 −2
Sweden −5 −3
TWI 2 1
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Table 6: Demand and Output
Percentage change
  December
qtr 2005		 March
qtr 2006
 Year to
March qtr
2005
 Year to
March qtr
2006
(a) Contributions to GDP growth
(b) Includes the statistical discrepancy
Source: ABS
Domestic final demand 1.6 0.8 3.4 5.0
Change in inventories(a) 0.0 0.0 −0.2 −0.3
GNE(b) 1.3 0.8 3.5 4.0
Net exports(a) −0.6 0.0 −1.7 −1.1
GDP 0.7 0.9 2.0 3.1
Memo item:
Real GDP adjusted for
changes in terms of trade		 1.3 0.7 3.4 5.1
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Table 7: House Prices
Percentage change
  APM REIA Residex ABS
Jun qtr
2006		 Year to
Jun qtr		 Jun qtr
2006(a)		 Year to
Jun qtr		 Jun qtr
2006(b)		 Year to
Jun qtr		 Year to
Mar qtr
(a) Seasonally adjusted by the RBA
(b) Three-month-ended
(c) Excludes Adelaide and Hobart
Sources: ABS; APM; REIA; state REIs; RBA; Residex
Sydney 1.2 −0.9 .. .. 2.8 1.8 −3.1
Melbourne −0.8 2.5 3.2 4.2 1.7 8.3 3.8
Brisbane 1.4 4.4 .. .. 1.1 4.8 2.8
Adelaide 2.7 5.9 2.3 4.2 .. .. 5.3
Perth 10.1 36.6 .. .. 8.2 28.3 28.8
Canberra 1.3 3.4 .. .. 0.0 4.5 1.4
Hobart 1.0 8.0 .. .. .. .. 9.9
Darwin 6.9 20.5 .. .. 1.2 17.4 17.4
Australia 2.0 5.6 .. .. 3.1(c) 9.0(c) 3.6
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Table 8: Fiscal Balance – General Government Sector(a)
Estimates, $ billion
  2005/06 2006/07
(a) ABS Government Finance Statistics basis
(b) Adjusted for differing funding arrangements for future superannuation liabilities
(c) As at 2005/06 South Australian Budget Mid-Year Review
Sources: Australian Treasury; RBA; state Treasuries
States
NSW −0.6 −2.5
Victoria −1.2 −0.6
Queensland(b) 0.7 −1.8
WA 1.4 0.5
SA(c) 0.0 −0.2
Tasmania 0.1 −0.1
ACT −0.1 −0.2
NT −0.1 −0.1
Total states 0.1 −4.9
– Per cent of GDP 0.0 −0.5
Federal government 16.5 10.9
– Per cent of GDP 1.7 1.1
Total:
States and federal 16.6 6.0
– Per cent of GDP 1.7 0.6
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Table 9: Labour Market by State
Per cent
  Employment growth Unemployment rate
June qtr
2006		 Year-ended
June qtr 2006		 June
qtr 2005		 June
qtr 2006
Source: ABS
NSW 0.4 0.9 5.1 5.4
Victoria 0.9 1.4 5.4 5.1
Queensland 1.1 2.1 5.0 4.7
WA 0.3 2.5 4.8 3.6
SA 0.3 0.8 5.0 5.1
Tasmania 0.4 3.0 6.1 6.5
Australia 0.8 1.6 5.1 5.0
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Table 10: Commodity Prices
Percentage change; SDR
  Three months
to July 2006		 Year to
July 2006
(a) Latest available data are for May.
(b) Oil prices are not included in the RBA Index.
Sources: ABS; AWB; AWEX; Bloomberg; Meat and Livestock Australia; RBA
RBA Index 1.3 17
Rural 0.1 12.7
– Wheat 4.3 30.8
– Beef & veal 1.2 2.1
– Wool 3.3 0.3
Base metals 11.2 74.9
– Aluminium −5.9 38.3
– Copper 18.7 110.2
– Nickel 42.8 76.3
Other resources −2.1 3.9
– Coking coal(a) −7.2 12.9
– Steaming coal(a) −2.1 1.0
– Iron ore(a) −8.5 −2.9
– Gold 1.6 46.6
Memo item:
Oil in US$(b) 6.9 26.7
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Table 11: Intermediaries’ Indicator Lending Rates
Per cent
  Current level
(1 August)		 Change since
end April
Source: RBA
Variable rates – household
Housing:
– Major banks’ standard variable 7.55 +0.25
– Major banks’ basic variable 7.00 +0.25
– Mortgage managers’ standard variable 7.15 +0.25
– Mortgage managers’ basic variable 6.55 +0.25
Other household:
– Home equity 7.70 +0.25
– Margin loans 8.50 +0.20
– Standard credit cards 17.00 +0.25
– Low-rate/no-frills credit cards 11.00 −0.10
Variable rates – small business
Residential security:
– Overdraft 8.45 +0.25
– Term loan 7.80 +0.25
Other security:
– Overdraft 9.35 +0.25
– Term loan 8.40 +0.25
Variable rates – large business
– Overdraft 9.35 +0.25
Fixed rates (3 years)
– Housing 7.20 +0.35
– Small business 8.10 +0.45
– Swap rate 6.40 +0.30
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Table 12: Housing Loan Interest Rates
Per cent
  Average January 1993
to July 2006		 July 2006 August 2006
(a) Assuming full pass-through of the August tightening
Source: RBA
Cash rate 5.50 5.75 6.00
Standard variable indicator rate 7.75 7.55 7.80(a)
Actual rate paid by new borrowers 7.50 6.95 7.20(a)
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Table 13: Financial Aggregates
Percentage change
  Average monthly growth
December qtr
2005		 March qtr
2006		 June qtr
2006
Source: RBA
Total credit 1.1 1.3 1.2
Household 1.0 1.1 1.1
– Housing 1.1 1.2 1.2
– Personal 0.4 0.8 1.0
Business 1.2 1.4 1.2
Broad money 0.3 1.1 0.7
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Table 14: Non-government Bond Issuance by Sector
$ billion
Sector 2003 2004 2005 2006
      March
quarter		 June
quarter
Source: RBA
Bond issues by Australian entities
Onshore
Financial institutions 9.9 14.3 20.9 4.5 5.9
Non-financial corporations 5.6 8.0 9.3 1.9 2.4
Asset-backed 20.7 25.0 32.2 7.9 14.8
Total 36.1 47.3 62.4 14.3 23.1
 Offshore
Financial institutions 51.5 64.9 52.2 25.4 12.2
Non-financial corporations 14.7 13.6 16.5 0.6 1.7
Asset-backed 24.3 29.8 25.6 6.2 5.3
 Total 90.5 108.2 94.4 32.2 19.2
Total 126.6 155.5 156.8 46.4 42.4
A$ bond issues by non-resident entities
Onshore 7.1 21.3 26.2 15.9 4.2
Offshore 24.8 21.5 12.0 3.7 2.6
Total 31.9 42.9 38.2 19.6 6.7
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Table 15: Measures of Consumer Prices
Percentage change
  Quarterly Year-ended
March
quarter
2006		 June
quarter
2006		 March
quarter
2006		 June
quarter
2006
(a) Volatile items are fruit, vegetables and petrol
Sources: ABS; RBA
CPI 0.9 1.6 3.0 4.0
– Tradables 0.8 2.7 2.8 4.8
– Tradables (ex food and petrol) 0.4 0.1 0.3 0.2
Non-tradables 0.9 0.8 3.1 3.4
Underlying measures
Weighted median 0.7 0.9 2.8 3.0
Trimmed mean 0.8 0.9 2.6 2.8
CPI ex volatile items(a) 0.8 0.6 2.2 2.4
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Table 16: Output Prices at Different Stages of Production
Percentage change
  June
quarter
2006		 Year to
June
quarter
2006
(a) Excluding exports
Sources: ABS; RBA
Preliminary 3.1 9.4
– Domestically produced 2.7 8.7
– Imported 4.9 13.8
– Excluding oil 2.2 6.7
Intermediate 2.8 8.0
– Domestically produced 2.6 7.5
– Imported 3.8 10.8
– Excluding oil 2.1 6.2
Final(a) 1.6 4.5
– Domestically produced 1.8 4.9
– Imported 0.7 2.3
– Excluding oil 1.0 3.7
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Table 17: Median Inflation Expectations
Per cent
  Year to December 2006 Year to December 2007
February
2006		 May
2006		 August
2006		 May
2006		 August
2006
(a) RBA survey
(b) Workplace Research Centre
Market economists(a) 2.8 2.9 3.6 2.6 2.6
Union officials(b) 3.0 3.3 4.2 3.2 4.1
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