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RESERVE BANK OF AUSTRALIA

Statement on Monetary Policy – February 2009

List of tables

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Chapters

Table 1: Discretionary Fiscal Easing in Selected Countries

Table 2: Changes in Monetary Policy

Table 3: Emerging Market Monetary Policy Changes

Table 4: Disbursement of Funds under the Troubled Asset Relief Program (TARP)

Table 5: Government-guaranteed Bank Bonds by Domicile of Issuer

Table 6: Changes in Global Share Prices

Table 7: Change in US Dollar against Other Currencies

Table 8: Australian Dollar against Selected TWI Currencies

Table 9: National House Prices

Table 10: Intermediaries’ Variable Lending Rates

Table 11: Credit Aggregates

Table 12: Measures of Consumer Prices

Table 13: Median Inflation Expectations

Table 14: Output and Inflation Forecasts

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Boxes

Table A1: Volatility in Global Financial Markets

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Table 1: Discretionary Fiscal Easing in Selected Countries
Per cent of GDP
  Estimated easing in 2009(a)
(a) Based on policy announcements and media reports
United States over 2
United Kingdom over 1
Germany 1½
Japan 1¼
China over 2
South Korea over 2
Taiwan over 2
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Table 2: Changes in Monetary Policy
  Current level Change since start
of easing cycle		 Expectations for
next 6 months
Per cent Basis points
Sources: Bloomberg; Thomson Reuters; central banks
United States 0.125 ↓ 513 No change
Euro area 2.00 ↓ 225 ↓ 50 bps
Japan 0.10 ↓ 40 No change
United Kingdom 1.50 ↓ 425 ↓ 50 bps
Canada 1.00 ↓ 350 ↓ 50 bps
Sweden 2.00 ↓ 275 ↓ 100 bps
Switzerland 0.50 ↓ 225 No change
Norway 2.50 ↓ 325 na
New Zealand 3.50 ↓ 475 ↓ 100 bps
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Table 3: Emerging Market Monetary Policy Changes
  Change since
previous Statement		 Current level
  Basis points Per cent
Sources: Bloomberg; central banks
Brazil ↓ 100 12.75
Chile ↓ 100 7.25
China ↓ 135 5.31
Czech Republic ↓ 125 2.25
Hungary ↓ 200 9.50
India ↓ 200 5.50
Indonesia ↓ 125 8.25
Israel ↓ 250 1.00
Malaysia ↓ 100 2.50
Mexico ↓ 50 7.75
Philippines ↓ 100 5.00
Poland ↓ 175 4.25
Russia ↑ 200 13.00
South Africa ↓ 50 11.50
South Korea ↓ 175 2.50
Taiwan ↓ 150 1.50
Thailand ↓ 175 2.00
Turkey ↓ 375 13.00
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Table 4: Disbursement of Funds under the Troubled Asset Relief Program (TARP)
US$ billion
Source: US Department of the Treasury
(a) Capital Purchase Program   250
– bank recapitalisation 195  
– remainder to be disbursed 55  
(b) Other programs   450
– Systemically Significant Failing Institutions
– American International Group
40  
– Targeted Investment Program
– Citigroup and Bank of America
40  
– Term Asset-backed Securities Loan Facility
– credit protection to Fed special purpose vehicle
20  
– Automotive Industry Financing Program
– General Motors; GMAC; Chrysler; Chrysler Financial
25  
– Asset Guarantee Program
– Citigroup
5  
– remainder to be disbursed 320  
Total TARP   700
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Table 5: Government-guaranteed Bank Bonds by Domicile of Issuer
Issuance
  US$ billion
Sources: Thomson Reuters; RBA
United States 134.5
France 38.1
Australia 38.0
United Kingdom 33.2
Germany 12.9
Sweden 9.6
Netherlands 9.5
Ireland 7.5
Austria 7.1
Norway 3.9
Portugal 3.5
Switzerland 2.6
Spain 2.6
Finland 1.6
Total 304.6
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Table 6: Changes in Global Share Prices
Per cent
  Since recent
peak		 Since previous
Statement
Source: Bloomberg
United States
– Dow Jones −44 −13
– S&P 500 −47 −13
– NASDAQ −47 −10
Euro area
– STOXX −52 −15
United Kingdom
– FTSE −37 −7
Japan
– Nikkei −56 −16
Canada
– TSE 300 −42 −12
Australia
– ASX 200 −50 −21
MSCI Emerging Asia −54 −5
MSCI Latin America −44 2
MSCI Emerging Europe −70 −29
MSCI World −48 −13
MSCI World Financials −67 −29
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Table 7: Change in US Dollar against Other Currencies
Per cent
  Past 12 months Since previous Statement
Sources: Bloomberg; Board of Governors of the Federal Reserve System; Thomson Reuters
New Zealand 54 16
South Korea 46 2
Australia 40 4
United Kingdom 36 8
Mexico 33 11
Brazil 32 5
South Africa 31 −2
Sweden 29 5
Indonesia 26 6
India 23 2
Canada 22 3
Philippines 17 −3
Euro area 14 −1
Malaysia 12 2
Thailand 6 0
Singapore 6 0
Switzerland 5 −2
Taiwan 5 2
China −5 0
Japan −16 −9
Majors TWI 13 1
Broad TWI 13 2
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Table 8: Australian Dollar against Selected TWI Currencies
Per cent
  Past 12 months Since last Statement Deviation from
post-float average
Sources: RBA; Thomson Reuters
New Zealand 11 12 3
South Korea 4 −1 32
United Kingdom −3 5 0
South Africa −4 −2 49
Indonesia −10 2 112
Canada −12 0 −15
India −12 −2 21
Euro area −18 −4 −25
Malaysia −20 −2 6
Singapore −24 −3 −22
Switzerland −25 −5 −31
Thailand −25 −5 −4
United States −29 −4 −11
China −33 −4 −5
Japan −41 −12 −39
TWI −24 −4 −10
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Table 9: National House Prices
Percentage change
  September
quarter 2008		 December
quarter 2008		 Year to December
quarter 2008
Sources: ABS; APM; RBA; RP Data-Rismark
ABS −2.4 −0.8 −3.3
RP Data-Rismark −1.4 −0.7 −2.3
APM −1.5 0.1 −2.1
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Table 10: Intermediaries’ Variable Lending Rates
Per cent
  Level at
end Jan 2009		 Change since:
End Oct
2008		 End Aug
2008		 End Jul
2007
(a) RBA estimate
Sources: ABS; APRA; Canstar Cannex; Perpetual; RBA
Cash rate 4.25 −1.75 −3.00 −2.00
Housing loans
Prime-full doc
Banks 6.17 −1.54 −2.76 −1.27
Credit unions and building societies 6.20 −1.69 −2.63 −1.17
Mortgage originators 6.38 −1.69 −2.72 −0.97
Prime low-doc
Banks 6.75 −1.45 −2.64 −0.94
Mortgage originators 7.22 −1.33 −2.61 −0.58
Non-conforming 10.23 −1.51 −1.51 0.60
Personal loans
Margin loans 8.92 −1.10 −1.65 −0.04
Standard credit cards 18.67 −1.08 −1.25 0.88
Low-rate credit cards 12.67 −0.56 −0.27 1.50
Unsecured term loans 14.10 −0.74 −0.80 1.48
Home equity loans 6.93 −1.30 −2.65 −1.29
Small business
Term loans
Residentially secured 8.28 −1.13 −1.81 −0.02
Other security 9.01 −1.00 −1.68 0.12
Overdraft
Residentially secured 9.10 −1.13 −1.81 0.05
Other security 9.93 −1.00 −1.66 0.21
Average actual rate(a) 8.37 −1.13 −1.80 −0.26
Large business
Average actual variable rate(a) 6.44 −1.84 −2.53 −1.12
Average actual bill rate(a) 5.10 −2.55 −3.28 −1.99
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Table 11: Credit Aggregates
Average monthly growth, per cent
  March
quarter 2008		 June
quarter 2008		 September
quarter 2008		 December
quarter 2008
Source: RBA
Total credit 0.8 0.5 0.6 0.2
Household 0.7 0.5 0.4 0.2
– Owner-occupier housing 0.9 0.7 0.5 0.6
– Investor housing 0.8 0.6 0.4 0.2
– Personal 0.0 0.0 −0.4 −1.4
Business 1.0 0.4 1.0 0.2
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Table 12: Measures of Consumer Prices
Percentage change
  Quarterly Year-ended
  September
quarter
2008		 December
quarter
2008		 September
quarter
2008		 December
quarter
2008
(a) Volatile items are fruit, vegetables and automotive fuel
Sources: ABS; RBA
CPI 1.2 −0.3 5.0 3.7
– Tradables 0.7 −1.8 3.4 1.2
– Tradables (ex food and fuel) 0.1 −0.2 1.1 0.9
– Non-tradables 1.6 0.6 6.1 5.4
Underlying measures
Weighted median 1.3 0.9 4.8 4.5
Trimmed mean 1.2 0.6 4.6 4.2
CPI ex volatile items(a) 1.1 0.5 4.6 4.1
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Table 13: Median Inflation Expectations
Per cent
  Year to June 2009   Year to June 2010
  August
2008		 November
2008		 February
2009		   November
2008		 February
2009
(a) RBA survey
(b) Workplace Research Centre
Market economists(a) 3.3 3.4 2.0   2.6 2.5
Union officials(b) 4.0 4.5 3.2   4.0 3.0
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Table 14: Output and Inflation Forecasts(a)
Percentage change over year to quarter shown
  Sep
2008		 Dec
2008		 June
2009		 Dec
2009		 June
2010		 Dec
2010		 June
2011
(a) Actual GDP data to September 2008 and actual inflation data to December 2008. Underlying inflation refers to the average of trimmed mean and weighted median inflation. For the forecast period, technical assumptions include A$ at US$0.65, TWI at 54, cash rate at 3.25 per cent, and WTI crude oil price at US$55 per barrel and Tapis crude oil price at US$57 per barrel.
Sources: ABS; RBA
GDP 1.9 1.0 ¼ ½ 1¼ 2½ 3¼
Non-farm GDP 1.7 1.0 0 ¼ 1¼ 2½ 3¼
CPI 5.0 3.7 1¾ 2½ 2¾ 2½ 2
Underlying inflation 4.7 4.3 3½ 3 2¾ 2½ 2
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Table A1: Volatility in Global Financial Markets
Annualised standard deviation of daily returns
Episodes Period Equities Currencies Government bonds
Sources: Bank of England; BIS; Bloomberg; Board of Governors of the Federal Reserve System; Global Financial Data; IMF; RBA; World Federation of Exchanges
Non-crisis periods 1980:Q1 – current 10 6 5
Sub-prime crisis – peak 2008:Q4 72 21 11
Sub-prime crisis – average 2007:Q3 – current 23 9 5
Enron scandal 2002:Q3 28 8 6
September 11 2001:Q3 15 6 4
Dot-com crash 2000:Q2 19 6 4
Russian debt default and LTCM 1998:Q3 – 1999:Q1 18 7 6
Asian financial crisis 1997:Q3 – 1997:Q4 16 5 4
1987 stock market crash 1987:Q4 32 8 10
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