RBA Minutes: Focus remains on Europe

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FXstreet.com (California) - In the Reserve Bank of Australia's ( RBA ) Minutes of the December meeting where it cut rates by 25 basis points to 4.25 percent, RBA Governor Glenn Stevens and the Board had an extensive discussion about the situation in Europe. After a positive reaction to the European Union summit in late October, downside risks from the region convinced the central bank to make the modest rate cut, according to the Minutes.

The minutes also showed that some factors did not suggest a strong need to cut rates. "The Board considered the question of whether a further reduction in the cash rate would be appropriate following the reduction in November," the minutes read. "On the one hand, there had been further evidence that a major investment boom was in progress and the overall economy was expanding at a pace broadly in line with trend. Australia's main trading partners were also still recording solid growth. This did not suggest any strong need to cut interest rates. Against this, developments in Europe continued to pose downside risks to the global economy and, consequently, also to Australia."



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