Statement on Monetary Policy - FEBRUARY 2020 - Reserve Bank of Australia
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Statement on
Monetary
Policy
F E B R UA RY 2 0 2 0
Statement on Monetary Policy
FEBRUARY 2020
Contents
Overview 1
1. The International Environment 5
Box A: The Recent Economic Slowdown in India 23
2. Domestic Economic Conditions 27
Box B: Macroeconomic Effects of the Drought and Bushfires 39
3. Domestic Financial Conditions 43
Box C: Do Borrowers with Older Mortgages Pay Higher Interest
Rates? 55
Box D: Enhancing the Transparency of Interest Rates 59
4. Inflation 63
5. Economic Outlook 71The material in this Statement on Monetary Policy was finalised on 6 February 2020. The next Statement is due for release on 8 May 2020. The Statement is published quarterly in February, May, August and November each year. All the Statements are available at www.rba.gov.au when released. Expected release dates are advised ahead of time on the website. For copyright and disclaimer notices relating to data in the Statement, see the Bank's website. The graphs in this publication were generated using Mathematica. Statement on Monetary Policy enquiries: Secretary's Department Tel: +61 2 9551 8111 Email: rbainfo@rba.gov.au ISSN 1448–5133 (Print) ISSN 1448–5141 (Online)
Overview
Monetary policy was eased in 2019 to support outlook for the Australian economy is broadly
employment and income growth and to provide unchanged from three months ago.
greater confidence that inflation will be GDP growth is expected to improve over the
consistent with the medium-term target. This course of this year and next. Growth is expected
policy response is supporting the overall growth to be 2¾ per cent over 2020 and around
outlook through a number of channels. The 3 per cent over 2021. This is a step up from the
Australian dollar is lower than it otherwise would growth rates recorded over the previous two
be as a result of the policy easing; it is now years. Part of this recovery reflects the expected
around the bottom of its range in recent years. transmission of the low level of interest rates to
Interest rates faced by both borrowers and the housing market and household spending. A
lenders are now at very low levels. The lower turnaround in mining investment is also
interest rates have contributed to increased expected, consistent with the publicly
demand for both new and existing homes. They announced investment plans of firms in that
also lower required debt payments for many sector. The recovery effort following the
households. The resulting extra cash flows can bushfires is likely to reverse the negative near-
be spent or used to pay down debt faster, term economic effects of the fires on aggregate
although this benefit is partly offset by reduced activity, but drought conditions are likely to
interest income for savers. The effects of the continue to weigh on rural production and
recent rate reductions take time to work their exports for a while yet.
way through the economy and have their full
The transmission of monetary policy is evident
impact on spending. Some of the early stage
in established housing markets. Housing prices
channels of policy transmission, such as new
have turned around noticeably, especially in
borrowing, higher asset prices and a depreci-
Sydney and Melbourne. Housing turnover,
ation of the exchange rate, are nonetheless
which is an important driver of some types of
proceeding as normal.
household spending, has increased, as has new
The low level of interest rates in Australia reflect borrowing, particularly by owner-occupiers. It is
the low interest rates globally as well as the only too soon to see any response to this in
gradual progress towards the Bank’s goals, as the household spending, but over time the drag on
Australian economy navigates a period of slow consumption growth from the earlier decline in
growth. This soft patch in growth is likely to housing prices and activity should wane. That
extend into early 2020 because of the ongoing said, at this stage it cannot be ruled out that the
drought, the effects of the bushfires, and the sharp fall in housing prices has reduced the level
effects on Australian exports of the recent of debt that households feel comfortable
outbreak of a new coronavirus in China. Beyond carrying, even after housing prices recover. So
these shorter-term effects, the medium-term the effect of the cycle in housing prices on
S TAT E M E N T O N M O N E TA R Y P O L I C Y – F E B R UA R Y 2 0 2 0 1spending might last longer than historical confidence was most likely to be a reaction to
experience implies. The forecast for consump- the same developments that prompted recent
tion takes some account of this. policy easing, rather than to the rate reductions
A recovery in dwelling investment is likely to themselves. That said, the consumption outlook
occur towards the end of this year in response to remains uncertain and its evolution will
lower interest rates as well as the strong growth continue to be an important focus of the Board.
in established housing prices and population In line with the expected pick-up in GDP growth,
growth. Early indicators of demand and sales are employment growth is expected to increase
already showing signs of turning around, which over time, after having eased a little lately. As this
gives more confidence that the recovery will occurs, the unemployment rate should also
proceed as expected. come down. The unemployment rate declined
A key consideration for monetary policy remains slightly through the December quarter, to be
the outlook for consumption. In the September 5.1 per cent in the month of December. It is
quarter, consumption growth was weaker than expected to remain in the 5–5¼ per cent range
earlier expected, and it is likely to remain for some time before declining to around
subdued in the December quarter. Recent data 4¾ per cent in 2021. The central forecast does
have been consistent with households gradually not envisage a repeat of the recent unusually
adjusting their spending to the slower trend rate strong increase in labour force participation, but
of income growth and it appears that this cannot be ruled out if employment growth
adjustment may have accelerated in response to turns out to be stronger than expected.
the prior period of falling housing prices. Wages growth has been low and steady for
Consistent with this, there was also an increase some time, in line with the spare capacity still in
in mortgage payments over the second half of the labour market, as well as the constraints
last year. Tax cuts and interest rate reductions implied by the wages policies of various govern-
helped support income in the September ments. As the unemployment rate declines and
quarter, although consumption remained the labour market tightens, some limited
subdued in the face of this balance sheet upward pressure on wage outcomes can be
adjustment. expected.
Consumption growth is expected to recover Inflation remains low and stable. The recent
gradually over the course of this year and next. inflation data were in line with our expectations
The low level of interest rates, a somewhat faster and confirmed a modest lift in CPI inflation over
rate of income growth than in recent years and recent quarters to 1.8 per cent. Trimmed mean
the recovery in household wealth are all inflation was a little lower at 1.6 per cent. Both
expected to contribute to this turnaround. measures are forecast to increase gradually to
Lower rates have been assisting with the 2 per cent over the next couple of years. The
ongoing adjustment in household balance outlook for inflation in part rests on the expec-
sheets by reducing debt-servicing costs. The tation that the drag coming from housing-
Board took note that some survey measures of related inflation will dissipate as the housing
confidence about the future had declined, market recovers following the easing in
although measures of current business monetary policy. Early signs of this are evident in
conditions and households’ views about their reduced discounting of the prices of newly built
finances, which tend to be more indicative of houses in the December quarter. Retail price
economic decisions, remain around average. inflation has generally been subdued, but the
The Board therefore assessed that the decline in
2 R E S E R V E B A N K O F AU S T R A L I Adrought has been putting upward pressure on In considering this case, the Board has taken
the prices of an increasing range of food items. account of the fact that interest rates have
The outlook for the Australian economy has in already been reduced to a low level and there
part been shaped by the evolving global are long and variable lags in the transmission of
outlook. The global economy has clearly monetary policy. The Board also recognises that
suffered over the past year from the uncertainty a balance needs to be struck between the
and interruption to international trade caused benefits of lower interest rates and the risks
by the US–China trade and technology disputes. associated with having interest rates at very low
Towards the end of 2019 and early 2020, levels. Internationally, there are increasing
indications were that global growth was poised concerns about the effect of very low interest
to improve. The phase one partial trade deal rates on resource allocation in the economy and
between the United States and China has their effect on the confidence of some people.
reduced the tensions between the two Lower interest rates could also encourage more
countries. This has alleviated but not eliminated borrowing by households eager to buy
an important source of uncertainty around the residential property at a time when housing
global outlook. It has also contributed to the debt is already quite high and there is already a
accommodative financial conditions. strong upswing in housing prices in place. If so,
this could increase the risk of problems down
The outbreak of the coronavirus and the efforts
the track.
of authorities in China and elsewhere to contain
its spread represents a new source of After considering this balance, the Board
uncertainty. This will reduce Chinese and global decided to maintain the cash rate unchanged at
growth in the short term. With the situation still its recent meetings. It recognises, though, that
evolving, it is very uncertain how much growth the balance between benefits and risks can
will slow or for how long. Previous outbreaks of change over time and it is dependent upon the
new viruses have had significant, but short-lived, state of the economy. If the unemployment rate
negative effects on economic growth in the were to be moving materially higher and there
economies at the centre of the outbreak. It is was no further progress being made towards
difficult to know how representative these the inflation target, the balance of arguments
earlier episodes could be. The economic impact would tilt towards a further easing of monetary
will depend crucially on the duration of its policy. The Board will continue to monitor
impact and measures taken to contain the developments carefully, including in the labour
spread of the virus. market.
The forecasts imply progress towards the
inflation target and full employment, but that
progress is expected to be only gradual. To
maintain this progress, monetary policy is very
likely to remain accommodative for some time.
Given the only gradual nature of the progress,
the Board has been discussing the case for a
further easing of monetary policy in order to
speed the pace of progress and to make it more
assured in the face of ongoing uncertainties.
S TAT E M E N T O N M O N E TA R Y P O L I C Y – F E B R UA R Y 2 0 2 0 34 R E S E R V E B A N K O F AU S T R A L I A
1. The International Environment
The global outlook remains reasonable but US–China trade and technology
uncertain. In January, the United States and tensions have eased which is supportive
China signed a partial trade agreement thereby of global growth …
de-escalating their dispute over trade and Since October there have been some positive
technology. This has reduced, but not developments on the US–China trade and
eliminated, a key downside risk to global growth technology disputes. Threatened tariff increases
and, together with some more positive signs in in October and December 2019 were cancelled
global economic data, supported forecasts for a as the United States and China negotiated the
pick-up in global growth in 2020 and 2021. More limited phase one trade agreement signed in
recently, however, the outbreak of a new strain January. The agreement provides for a small
of coronavirus is expected to weigh on near- reduction in overall tariffs, increased Chinese
term growth and has created a new uncertainty purchases of US products and some steps to
for the outlook. address US concerns about market access and
Developments in global financial markets over the protection of intellectual property. Despite
recent months have reflected evolving the agreement, tariffs between the two
perceptions of these key risks. Overall though, countries remain around the highest they have
global financial market conditions remain been in about 30 years after they were increased
supportive of economic growth. Following a to nearly 20 per cent in 2018 and 2019.
period in 2019 of monetary easing, central banks There have also been signs of stabilisation in
in advanced economies have indicated that global manufacturing and trade since late 2019
their current policy settings are likely to remain (Graph 1.1). However, most of these indicators
appropriate for some time, though they remain remain at subdued levels, as do business
prepared to ease further if necessary. Long-term investment intentions. Spillovers from the
government bond yields had risen as concerns weakness in conditions for export-oriented
about key downside risks eased, but have since sectors have been limited so far partly because
declined noticeably and are back at very low of support from stimulatory policy. Consump-
levels. Corporate financing conditions have tion growth has generally remained resilient
generally remained favourable; credit spreads through the past year. Employment growth has
are at low levels and equity prices have generally slowed a little in the major advanced economies
risen further over the past couple of months, but labour markets remain tight. Despite that,
notwithstanding recent declines. inflation remains low and below most central
banks’ targets.
The easing in trade tensions between the United
States and China, and signs of stabilisation in a
number of economic indicators, led to small
S TAT E M E N T O N M O N E TA R Y P O L I C Y – F E B R UA R Y 2 0 2 0 5improvements in the underlying growth outlook outbreak. If it persists for an extended period,
for a number of economies. Forecasts released the effect on economic activity is likely to be
by the International Monetary Fund in mid larger than currently projected. The outlook for
January showed global growth picking up in China, and how policy responses there could
2020 and 2021, led by emerging market and affect China’s demand for Australia’s exports and
developing economies. the exports of Australia’s other key trading
partners in Asia, remains an important
… but the coronavirus outbreak has consideration for the Australian economy.
lowered the near-term growth outlook A number of other downside risks remain.
and increased uncertainty Despite the recent positive developments in
The recent outbreak of a new strain of US–China negotiations, an escalation in the
coronavirus has lowered the near-term growth dispute remains a key downside risk to the
outlook for China and some other economies, outlook given the limited nature of the phase
particularly in Asia. In China, economic effects one deal and the potential for renewed tensions
include lower domestic travel and other to weigh on trade and investment.
consumption, and disruption to the movement Considerable uncertainty also remains for other
of goods. Also, business shutdowns will trade arrangements. The United States
negatively affect industrial production and postponed a decision on possible actions
services. The effects of the outbreak are likely to affecting automotive imports from the European
flow through to other economies, particularly in Union. The trade dispute between Japan and
east Asia, including via sharply lower Chinese South Korea has raised uncertainty about supply
outbound tourism, weaker Chinese demand for in the South Korean semiconductor industry and
other exports and disruption to global supply reduced tourism flows between the two
chains. As China and east Asia are large trading countries. The United Kingdom formally exited
partners for Australia, overall growth in the European Union in January under a short
Australia’s major trading partners is expected to transition arrangement, reducing the prospects
be a little lower in 2020 before picking up in of a disorderly near-term breakdown of the
2021 (Graph 1.2). UK–EU trading relationship, although the
There is considerable uncertainty regarding the ultimate form of the trading relationship remains
duration and severity of the coronavirus
Graph 1.2
Graph 1.1 Global GDP Growth
Year-average
Global Economic Conditions %
Forecasts
%
% index Australia’s major
Trade Purchasing Managers’ Index
Imports trading partners*
6 6
growth*
(LHS)
4 56
Services
(RHS) 4 4
World**
2 53
2 2
0 50 0 0
Manufacturing
(RHS)
New export orders
(RHS) -2 -2
-2 47 1991 1997 2003 2009 2015 2021
2016 2020 2016 2020 * RBA forecasts as at February 2020; Australian export share-weighted
* Smoothed; year-ended growth ** IMF forecasts as at January 2020; PPP-weighted
Sources: CPB Netherlands; Markit; RBA Sources: CEIC Data; IMF; RBA; Refinitiv
6 R E S E R V E B A N K O F AU S T R A L I Auncertain. The future functioning of the World creates a new uncertainty. At this stage, growth
Trade Organization is also unclear. By contrast, is expected to decrease significantly in the
lingering uncertainty about the United States, March quarter before rebounding later in the
Mexico and Canada trade agreement was year, although the situation is very dynamic and
alleviated when it was passed by the US the timing over Chinese New Year will make the
Congress in January. economic impact especially difficult to read.
Conditions in Chinese property markets
In China, growth appeared to stabilise in remained mixed in the December quarter
late 2019 (Graph 1.5). Property prices continued to rise,
In China, GDP growth slowed in 2019, to although the pace of price growth has been
6.1 per cent compared with 6.7 per cent in 2018. moderating for some time. Sales declined in the
The slowdown was driven by domestic demand, quarter, while spending on construction and
and was mostly the result of longer-term fittings remained robust. Local governments
structural factors and ongoing actions to reduce continued to tailor housing policies to account
risks in the financial sector. Uncertainty for local conditions, with restrictions eased in
associated with the US–China trade and some areas to offset weak conditions.
technology dispute is also likely to have affected
investment decisions, and growth in retail sales
has been easing.
Graph 1.3
Over the course of the December quarter, China – Activity Indicators*
Growth
however, a range of indicators of Chinese %
Real fixed asset investment Real retail sales
%
activity recovered somewhat (Graph 1.3 and 40 20
Year-ended
Graph 1.4). This suggested that targeted fiscal
30 15
and monetary easing were helping to stabilise
economic conditions. Growth in fixed asset 20 10
investment strengthened, driven by a pick-up in 10 5
investment in the manufacturing sector.
0 0
Industrial sector indicators also showed some Quarterly
signs of improvement in the December quarter. -10
2009 2014 2019 2009 2014 2019
-5
Growth in industrial production picked up, * Seasonally adjusted by the RBA
Sources: CEIC Data; RBA
particularly for the output of construction
materials such as steel and plate glass. Car
production also increased modestly after Graph 1.4
declining over the past couple of years, and China – Industrial Production
Year-ended growth
producer prices stopped declining as the % Three-month moving average %
deflationary effect of falling raw materials and
Value-added
manufactured goods prices began to abate. Steel products
10 15
Electricity
The January trade agreement with the United generation
States should have alleviated some of the
uncertainty affecting investment, and local 0 0
Gross output
governments are also in a position to rekindle
Crude steel
infrastructure investment growth now that
-10 -15
preliminary bond issuance quotas have been 2011 2015 2019 2015 2019
released. However, the coronavirus outbreak Sources: CEIC Data; RBA
S TAT E M E N T O N M O N E TA R Y P O L I C Y – F E B R UA R Y 2 0 2 0 7Core consumer price inflation continued its Chinese authorities have announced
gentle downward trend and was 1.4 per cent in further targeted policy easing
December (Graph 1.6). Headline inflation Chinese policymakers have continued to
increased sharply as pork supply shortages balance their objectives of supporting economic
caused by the outbreak of African swine fever growth and reducing risks in the financial
drove large increases in pork prices and other system. Fiscal and monetary policy measures
meat products. Pork prices have declined a little have been modest overall and generally focused
from their peak in December, reflecting signs on specific areas of weakness in the economy –
that pork production is beginning to recover, namely, public infrastructure spending and
but prices are expected to remain elevated for access to finance for small and private sector
some time. firms. More recently, the authorities have
announced some measures to support liquidity
and bank lending in the near term to alleviate
disruptions related to the coronavirus. It remains
unclear at this stage whether additional support
will be needed in response to the virus.
Graph 1.5 To support infrastructure spending, local
China – Residential Property Indicators governments were given a preliminary
Year-ended growth
% New property prices Investment** ppt allocation of their 2020 special bond issuance
Alternative* Land purchases quota so that they could plan for, fund, and
15 20
begin work on eligible infrastructure projects
0 0
Official before the final quota is set at the National
Other investment***
% %
People’s Congress in March. The preliminary
Floor space sold Inventory
allocation of CNY 1 trillion was around
50 25
25 per cent higher than the equivalent
0 0
allocation granted in 2019 and local govern-
-50 -25 ments have responded by issuing these bonds
2016 2019 2016 2019
* China Index Academy earlier than in previous years (Graph 1.7). The
** Contributions of residential and non-residential investment to
year-ended growth authorities also reduced the amount of equity
*** Construction, installation, equipment purchases and other
Sources: CEIC Data; CIA; CRIC; RBA capital required for some infrastructure projects
including for ports, roads, rail, logistics and
ecological protection.
Graph 1.6
China – Inflation*
The People’s Bank of China (PBC) reduced the
%
Year-ended
%
reserve requirement ratio by 50 basis points for
Consumer prices Producer prices
all financial institutions in January (Graph 1.8). In
8 10
Headline part, this was aimed at ensuring sufficient
liquidity ahead of Chinese New Year. In late 2019,
4 5
the PBC also marginally reduced the interest
0 0 rates on its short-term and medium-term
Core
lending operations. Subsequently, the one-year
-4 -5
Loan Prime Rate (LPR), the new reference rate for
-8 -10
non-mortgage lending by Chinese banks,
2009 2014 2019 2009 2014 2019
* Seasonally adjusted by the RBA
declined by 5 basis points. In addition,
Sources: CEIC Data; RBA
authorities implemented further measures to
8 R E S E R V E B A N K O F AU S T R A L I Asupport financing conditions for micro and small most new loans issued had already been
enterprises (MSEs). In particular, the State referencing the LPR. The LPR is linked to the rate
Council called upon banks to lower financing offered by the PBC on its medium-term lending
costs for some MSEs by 50 basis points and facility (MLF), so interest rate changes by the PBC
instructed the five largest commercial state- will directly affect lending rates. However, to
owned banks to increase the value of loans avoid overstimulating the housing market,
extended to MSEs by 20 per cent over the next authorities have stated that mortgage rates
year. Growth in total social financing (excluding must remain unchanged at the time of
government bond issuance) has remained conversion and that the repricing period must
stable in year-ended terms but declined in the be at least one year. This means that mortgage
December quarter because off-balance sheet rates will not change until at least 2021, even if
financing contracted more quickly than earlier in the PBC reduces the MLF rate.
the year. More recently, authorities announced a
range of measures to avoid a tightening in Growth in east Asia also appeared to
financial conditions as a result of the coronavirus stabilise in late 2019
outbreak. In particular, the PBC has pledged to Growth indicators in east Asia stabilised in late
maintain adequate liquidity in the system and 2019 following a period when weak external
has encouraged banks to reduce lending rates demand, particularly from China, and the effects
to assist firms affected by the outbreak. of the US–China trade dispute on global supply
As part of ongoing efforts by the Chinese chains had weighed on growth. The levelling
authorities to improve the transmission of out in activity indicators in the region is
monetary policy and the transition towards consistent with more favourable trade develop-
market-based pricing of financial products, the ments evident since October 2019. After a
PBC announced the next stage of its lending period of decline, industrial production has been
rate reform in late 2019. The PBC instructed flat in recent months, while surveyed manufac-
banks to begin shifting the outstanding stock of turing sector conditions and new export orders
loans to reference the LPR from March 2020, and have picked up somewhat (Graph 1.9).
it expects this transition to be complete by the Merchandise export volumes have been largely
end of August. Banks were also instructed to flat over the past year, supported by relatively
cease issuing new loans that referenced the old resilient semiconductor exports. However, weak
benchmark rate from 1 January 2020, although
Graph 1.7 Graph 1.8
Chinese Monetary Policy
Chinese Local Government Bonds % %
Reserve requirement ratio Interest rates
New issuance, cumulative
CNYtr CNYtr
Special bonds General bonds
Large banks
20 8
Average loan
2 2 Medium rate
2019 15 6
Five-year
LPR
2018
10 4
1 1 One-year
One-year loan
2020 Small* LPR
benchmark rate
2017
5 2
2012 2016 2020 2012 2016 2020
0 0 * Not published prior to April 2018. Note this rate is a guideline and
J FMAM J J A S ON D J FMAM J J A S ON D does not apply to all small banks.
Source: WIND Information Source: CEIC Data
S TAT E M E N T O N M O N E TA R Y P O L I C Y – F E B R UA R Y 2 0 2 0 9memory chip prices have weighed on export GDP growth in most of the export-oriented
values, particularly in South Korea and economies in the region was subdued over
Singapore, and on business profits and 2019 because business investment and exports
investment. More recently, memory chip prices have weighed on growth (Graph 1.11). In South
appear to have bottomed out, which should Korea, weak residential investment and softer
support future activity and investment in this household consumption have also contributed
key sector for the region (Graph 1.10). The easing to the weakest GDP growth in a decade,
of US–China trade tensions, signs of a although public consumption has supported
turnaround in the global electronics cycle and growth and fiscal policy is expected to be very
more stimulatory policies are supportive of expansionary in 2020. In contrast, GDP growth in
slightly stronger growth in east Asia over the Vietnam has been strong, boosted by export
next couple of years. However, the coronavirus growth to the United States as some production
outbreak in China is expected to weigh on has been relocated from China in response to
growth in the region in early 2020 because of the US–China trade dispute. Activity has also
the disruption to Chinese traveller flows and picked up in some of the less export-oriented
supply chains. economies in the region, such as the Philippines.
Growth in Indonesia has been steady, driven by
relatively resilient consumption growth.
Graph 1.9
Ongoing political unrest continues to weigh
East Asia – Production and Trade
index Production and new export orders index heavily on Hong Kong economic activity.
108 53
Inflation remains low in east Asia. Inflation in
100 50
South Korea has been especially low and well
92 47
Industrial production* New export orders
(LHS) (RHS) below target, although headline inflation picked
index Trade* index
up sharply in January (Graph 1.12). Inflation in
115 115
Merchandise export values Indonesia has been relatively steady, while it has
100 100
been quite volatile in Malaysia following
85 85
Merchandise export volumes changes in consumption taxes. In the
70 70
2012 2014 2016 2018 2020 Philippines, inflation rose again as domestic
* Average since 2012 = 100
Sources: CEIC Data; Markit; RBA
Graph 1.10 Graph 1.11
Semiconductor Industry Indicators East Asia – GDP Growth
Year-ended growth Year-ended with contributions
% % % Export-oriented east Asia* %
East Asia Global sales Less-export-oriented
east Asia**
50 20
Production*
4 4
25 10
0 0
0 0
GDP
-25 -10 Exports
Prices** Investment
Other
-50 -20 -4 -4
2015 2019 2015 2019 2015 2019 2015 2019
* Weighted aggregate of South Korea, Malaysia, Singapore, Taiwan * Includes Hong Kong, Malaysia, Singapore, South Korea, Taiwan
and Thailand and Thailand
** South Korea memory chip export prices ** Includes Indonesia and the Philippines
Sources: CEIC Data; RBA; Refinitiv Sources: CEIC Data; RBA
10 R E S E R V E B A N K O F AU S T R A L I Aactivity picked up and as food prices increased Economic activity in India
because of weather-related factors. slowed further
Monetary policy became more accommodative Economic growth in India has slowed sharply
in the region over 2019 to support growth since early 2018, reflecting ongoing weakness in
against the backdrop of low inflation and amid domestic demand (see ‘Box A: The Recent
reduced concerns about capital outflows Economic Slowdown in India’). In the September
(Graph 1.13). For a few economies in the region quarter, exports contracted while public
there was a pause in the policy easing cycle in consumption helped support growth. Credit
late 2019 driven by an expectation that earlier provision to the services sector has contracted in
episodes of monetary and fiscal easing would recent months despite the government and the
support the economic outlook. More recently, Reserve Bank of India (RBI) taking a number of
however, some central banks have highlighted a measures to encourage both bank and non-
willingness to ease policy further in response to bank lending. The slowdown in growth has
the effects of the coronavirus. been larger than expected. There are some
tentative signs, however, that growth will
stabilise soon: car sales have increased in recent
months after declining since mid 2018; air
passenger traffic growth has picked up in recent
Graph 1.12
months; and, in the December quarter, capital
East Asia – Headline Inflation
Year-ended expenditure increased for the first time since the
% %
June quarter of 2018 (Graph 1.14). Even so, any
Indonesia
8 8 pick-up in growth is likely to be modest in the
Philippines
6 6 near term. Indicators of industrial sector activity
are weak and credit conditions remain
4 4
challenging.
2 2
Headline inflation increased to be above the top
South Korea
0 0 of the RBI’s target range, reflecting damaged
Malaysia
-2 -2
crops and higher vegetable prices following
2012 2014 2016 2018 2020
Sources: CEIC Data; RBA
heavy rainfall late in the monsoon season
(Graph 1.15). This was accompanied by a sharp
Graph 1.13
Graph 1.14
Asia – Policy Rates
% % India – Economic Activity Indicators
Three-month moving average, year-ended growth
% %
Consumption Investment
8 8
Air passenger
traffic
Indonesia* India
15 15
6 6 Capital
expenditure
Philippines
4 4 0 0
Malaysia
2 2
-15 -15
Thailand Passenger vehicle Capital goods
sales production
0 0
2012 2014 2016 2018 2020
* Dashed line indicates a change in official policy rate for Indonesia -30 -30
(August 2016) 2011 2015 2019 2015 2019
Source: Central banks Sources: CEIC Data; RBA; Refinitiv
S TAT E M E N T O N M O N E TA R Y P O L I C Y – F E B R UA R Y 2 0 2 0 11increase in household inflation expectations. In GDP growth in the United States eased to
response, the government eased restrictions on around trend over 2019. Business investment
onion imports and banned onion exports. Price declined and investment intentions eased
pressures have moderated in most other sharply (Graph 1.18). Consumption growth
expenditure categories and core inflation slowed a little in late 2019, although it remains
remains relatively subdued. The RBI kept its firm and consumer confidence is high
policy rate unchanged in December, citing the (Graph 1.19). Lower interest rates have
less favourable inflation environment and its supported a pick-up in residential investment.
expectation that the lagged effects of monetary The US growth outlook is also a little stronger
and fiscal stimulus implemented in 2019 will than three months ago because reduced
support activity. It noted that there is space for uncertainty around trade is expected to support
further monetary easing if required. business investment, and the resilient labour
market is expected to continue supporting
Activity in major advanced economies consumption. GDP growth over the next two
slowed in 2019 but there have been years is expected to continue at around its
signs of stabilisation
Growth in the major advanced economies was
slower in 2019 than in 2018 (Graph 1.16). Manu- Graph 1.16
facturing activity declined, especially in the euro Major Advanced Economies –
GDP Growth
area, external demand has been weak and %
United States Euro area Japan
%
services activity has eased. In this environment,
Year-ended
and amid uncertainty about trade and 4 4
technology policies, growth of investment has
eased. However, consumption growth has 2 2
remained resilient because it has been
supported by tight labour markets. More 0 0
Quarterly
recently there have been signs of stabilisation in
the manufacturing sectors of these economies -2
2014 2019 2014 2019 2014 2019
-2
and in US investment intentions (Graph 1.17). Sources: RBA; Refinitiv
Graph 1.15 Graph 1.17
India – Consumer Price Index Major Advanced Economies –
Year-ended growth
% % Business Conditions
Purchasing Managers’ Index
index index
16 16 United States Euro area Japan
Headline Services Manufacturing
12 12 60 60
Excluding
food and fuel*
8 8
55 55
4 4
0 0 50 50
Monthly
ISM
-4 -4
2007 2010 2013 2016 2019 manufacturing
* Constructed by the RBA; food and fuel comprise 52.7 per cent of 45 45
the CPI basket 2016 2020 2016 2020 2016 2020
Sources: CEIC Data; RBA Sources: Markit; Refinitiv
12 R E S E R V E B A N K O F AU S T R A L I Acurrent pace, which is consistent with potential sector to the services sector and the labour
growth. market. Euro area growth is expected to remain
In the euro area, GDP growth has been subdued weak over the next two years because external
over the past two years because of pervasive demand is expected to recover only gradually
weakness in external demand. This has and uncertainty persists about key trading
particularly affected economic conditions in relations, including with the United Kingdom.
Germany, where industrial production has Japanese economic activity slowed following
declined significantly. Survey indicators of the consumption tax increase in October 2019.
conditions in the manufacturing sector remain As was expected, consumption and residential
very weak. The investment outlook in the euro investment indicators fell sharply after the tax
area is subdued. Investment intentions and increase following strong growth in the middle
industrial confidence are well below average of the year as activity was brought forward.
levels. Consumption has remained firm so far, Surveyed conditions in the services sector,
despite some spillovers from the industrial which had been quite resilient, declined in the
December quarter but largely recovered in
January. Business investment growth, while still
Graph 1.18 strong, has slowed and investment intentions
Major Advanced Economies – have eased. Industrial production has declined
Investment Indicators
%
United States Euro area Japan
std in recent months and conditions in the manu-
dev
facturing sector remain around their recent lows,
20 4 partly because of the disruption from the
Capital goods Investment
orders* intentions** consumption tax increase and partly because of
(LHS) (RHS)
10 2 weak external demand. The coronavirus
outbreak in China is also likely to lower traveller
0 0 flows from China significantly in early 2020.
However, fiscal stimulus, focused on infras-
-10
2014 2020 2014 2020 2014 2020
-2 tructure and equivalent to around 1 per cent of
*
**
Year-ended growth GDP, has been announced to support growth in
Smoothed for US
Sources: Bank of Japan; RBA; Refinitiv 2020 and early 2021. Accordingly, the outlook for
Japan is little changed in net terms; growth is
expected to dip below trend in late 2019 and
Graph 1.19 early 2020, before gradually recovering to
Major Advanced Economies – around trend growth in 2021 as external
Consumption Indicators
std
United States Euro area Japan
% demand improves.
dev Consumption
indicator*
(RHS)
2 2.5
Labour market conditions have eased
but remain tight
0 0.0
Consumer
Employment growth in the major advanced
sentiment
(LHS) economies has slowed since early 2019,
-2 -2.5
particularly in the manufacturing sector. Near-
term forward-looking indicators of labour
-4 -5.0
2014 2020 2014 2020 2014 2020 demand, such as vacancy rates and employ-
* Year-ended growth; smoothed; personal consumption expenditure
for United States, retail sales for euro area and consumption index
for Japan
ment intentions, have eased a little but are still
Sources: CEIC Data; RBA; Refinitiv
at high levels (Graph 1.20). Nonetheless, employ-
S TAT E M E N T O N M O N E TA R Y P O L I C Y – F E B R UA R Y 2 0 2 0 13ment growth remains above working-age since August. Inflation in the euro area has
population growth and therefore unemploy- increased since October, largely due to stronger
ment rates, which are already at multi-decade services and food inflation. Inflation has been
lows, continue to fall. Wages growth in the major little changed in Japan despite the increase in
advanced economies remains around decade the consumption tax because its effects were
highs but has eased a bit in the United States largely offset by the introduction of free
(Graph 1.21). These labour market outcomes preschool education.
continue to support consumption growth. After trending higher towards the end of 2019,
market-based measures of short-term inflation
Inflation remains low in the major expectations decreased in late January following
advanced economies the outbreak of the coronavirus and (related)
Inflation remains below central banks’ targets in noticeable declines in oil prices. Longer-term
the major advanced economies (Graph 1.22). market-based inflation expectations remain low.
Core inflation in the United States has eased
After easing last year, central banks in
major advanced economies are
Graph 1.20
expected to leave policy settings
Major Advanced Economies –
Labour Market Indicators unchanged for some time
std %
Employment intentions* Vacancy rates
dev Central banks in advanced economies left policy
United States
2 4 rates unchanged at recent meetings, but
Euro area
Japan signalled that they are prepared to ease further if
0 3
necessary. A number of central banks noted that
-2 2
the key risks that prompted pressures to ease
policies in 2019 – including escalation in trade
-4 1 tensions and slower global growth – had
receded somewhat. The US Federal Reserve
-6 0
2009 2014 2019 2009 2014 2019 (Fed), European Central Bank (ECB), and Bank of
* Standard deviation from long-run average
Sources: Eurostat; RBA; Refinitiv Japan (BoJ) indicated that their current policy
stances are likely to remain appropriate in the
Graph 1.21
Major Advanced Economies – Graph 1.22
Labour Market and Wages
Year-ended growth
Major Advanced Economies – Inflation
% % Year-ended
Employment Wages* % %
United States* Euro area Japan**
Japan 4 4
3 4
Headline
Japan part-time
2 2
0 2
Euro area Core
0 0
-3 0
United States Japan full-time -2 -2
-6 -2
2009 2014 2019 2009 2014 2019 -4 -4
2013 2020 2013 2020 2013 2020
* Average hourly earnings for the US; compensation per employee for
* Personal consumption expenditure inflation
the euro area; smoothed matched-sample average full-time scheduled
wages and part-time hourly wages for Japan ** Excludes effect of the consumption tax increase in April 2014
Sources: CEIC Data; ECB; Eurostat; RBA; Refinitiv Sources: RBA; Refinitiv
14 R E S E R V E B A N K O F AU S T R A L I Anear term, while noting that future policy evidence of a sustained increase in inflation
settings will depend on the resolution of towards 2 per cent. Market pricing suggests that
ongoing uncertainties. Market pricing now the ECB’s interest rate policy settings will remain
implies that central banks in advanced unchanged in the coming year.
economies are expected to either ease a little The BoJ has indicated that it is prepared to ease
further or leave policy rates at around current policy if it considers that there has been a loss of
low levels for some time (Graph 1.23). momentum in inflation reaching the 2 per cent
The Fed lowered the target range for its policy target. The BoJ recently made further
rate by 75 basis points to 1.5–1.75 per cent in adjustments to some aspects of how it
the second half of 2019, in response to subdued implements policy in an effort to improve the
inflation and downside risks to the outlook for sustainability of its current policy stance by
global growth. The Fed has since signalled that it mitigating the side effects of its asset purchases
would take a material reassessment of the on the financial sector. In October, the BoJ also
outlook to trigger further changes to policy reduced its purchases of long-term government
settings. Market pricing suggests that the Fed is bonds in an effort to steepen the yield curve.
expected to lower its policy rate one or two Following the Japanese Government’s
more times over the second half of the year. announcement of a fiscal stimulus package and
In September, the ECB announced a package of easing in some global risks, market pricing now
stimulus measures, which will continue to be implies that policy settings will remain
implemented over coming years, in response to unchanged this year.
weakening domestic economic activity and The Bank of Canada (BoC) left its policy rate
downside risks to the outlook (Graph 1.24). unchanged in January, after having being on
Governing Council members have stated that hold over 2019 amid a tight labour market and
there had been some tentative signs of inflation near target. However, the BoC stated
stabilisation in economic activity following the that growth has eased a little recently and now
slowdown seen in 2019, and that there had judges there to be a little more spare capacity
been a moderate increase in underlying than previously thought. The BoC indicated that
inflation. The ECB’s new President, Christine the policy rate may be lowered if the recent
Lagarde, reiterated that monetary conditions will slowdown persists and weighs on inflation.
remain highly accommodative until there is Market pricing implies that the policy rate will
Graph 1.23 Graph 1.24
Policy Rate Expectations* Central Bank Balance Sheets
% US %
Selected items; share of GDP
NZ
2 2 % %
Current European Central Bank Bank of Japan
1 1
Other securities
Japan 32 100
Exchange Traded Funds
0 0
Government bonds
Euro area Loans
% % 24 75
Canada
2 2
Norway 16 50
1 1
UK
0 0
8 25
Sweden
-1 -1
2017 2019 2021 2017 2019 2021
* Expectations for Norway and Sweden are based on central bank 0 0
forecasts 2010 2015 2020 2010 2015 2020
Sources: Bloomberg; Norges Bank; Sveriges Riksbank Source: Refinitiv
S TAT E M E N T O N M O N E TA R Y P O L I C Y – F E B R UA R Y 2 0 2 0 15be lowered by 25 basis points to 1.5 per cent compensation (Graph 1.25). These movements
towards the end of the year. were unwound in late January as concerns
The Bank of England (BoE) has stated that around the potential effects of the coronavirus
incoming information about the global and weighed on growth outlooks. Looking through
domestic economy will guide future interest rate recent volatility, yields remain at low levels,
decisions. The BoE noted that slower global reflecting ongoing subdued inflation,
growth and elevated Brexit-related uncertainties uncertainty in the outlook for global growth and
had weighed on growth in 2019, and spare expectations that monetary policies will remain
capacity had been larger than expected. accommodative. In China, yields have declined
However, more recent indicators of domestic following further targeted easing by the PBC
activity have strengthened. Market pricing and as the outbreak of the coronavirus
implies that the policy rate is expected to be intensified.
lowered by 25 basis points by the end of the
year. In December, the incumbent Conservative Funding costs for corporations have
Party secured an outright majority in Parliament, edged lower
paving the way for passage of the Withdrawal Corporate bond yields have declined a little
Agreement Bill. This allowed the UK to formally further in recent months (Graph 1.26). The low
leave the European Union under an interim cost of corporate debt combined with robust
agreement at the end of January. The full terms bond issuance reflects strong demand from
of the agreement need to be negotiated over investors that are seeking assets with higher
the course of this year. yields than those available on government
In Sweden and Norway, both central banks bonds.
expect policy rates to be little changed this year, A general narrowing in spreads has occurred
following a recent cycle of monetary tightening. despite a slight upward revision to market
The Swedish Riksbank raised its policy rate by analysts’ expectations for a rise in corporate
25 basis points to 0 per cent in December, which defaults from their current low levels. This
followed a 25 basis point increase in late revision appears to have reflected concerns
2018 and a period of around five years where about high levels of leverage in an environment
policy rates had been in negative territory. In of moderate economic growth. Consistent with
doing so, it highlighted its concerns about the this, the share of firms that have received credit
side effects of a prolonged period of negative rating downgrades has increased. Market
nominal interest rates. Norges Bank left its policy
rate unchanged at 1.5 per cent, after having
Graph 1.25
raised the policy rate three times in 2019 in
10-year Government Bond Yields
response to a solid domestic growth outlook % %
and concerns related to financial stability. 4
China
4
3 3
Government bond yields are around
US
record lows 2 2
Yields on long-term government bonds remain 1 1
UK
low. Yields have declined recently following a
0 0
gradual upward trend late last year, which had Germany
been in line with moderating downside risks to -1 -1
2016 2017 2018 2019 2020
growth and higher market-implied inflation Source: Bloomberg
16 R E S E R V E B A N K O F AU S T R A L I Aanalysts expect defaults to be concentrated at rates seen since late 2018 (which increases the
the lower end of the credit rating spectrum, discounted value of future earnings).
particularly in the energy sector where spreads In short-term US dollar money markets, spreads
have remained elevated compared with the (over and above expected policy rates) declined
broader US high yield market. towards the end of 2019. US repo markets
In China, the cost of funding for corporations functioned smoothly despite a build-up of
has been relatively stable over recent months. funding pressures in the second half of the year,
This is despite a pick-up in corporate bond partly reflecting the Fed’s injection of short-term
defaults, albeit from a low base. In the coming liquidity through repos as well as its purchases
months, firms adversely affected by the of Treasury bills (which are underpinning a
coronavirus outbreak may face difficulties in build-up of bank reserves held at the Fed). These
meeting bond repayments. To address this risk measures may have contributed to a reduction
authorities have encouraged investors to extend in the cost of funding in US dollars, including in
repayment deadlines for affected firms, in exchange for other currencies (Graph 1.28). The
addition to the range of measures announced to Fed has signalled that it expects to pare back its
support broader financial conditions. repo operations over the coming months as
Global equity prices have risen further over reserve balances in the banking system become
recent months, notwithstanding recent declines more plentiful.
related to concerns around the coronavirus.
Equity prices have risen by around 8 per cent Movements in exchange rates reflected
since the recent trough in September and are an easing in trade tensions and an
around 20 per cent higher than late 2018 escalation in concerns about
(Graph 1.27). In the United States, equity prices coronavirus
are near record highs. Valuation metrics show The US dollar and Japanese yen depreciated
that much of the increase in equity prices over December and early January, before partly
reflects investors’ increased willingness to pay reversing these moves later in January as
for future earnings, rather than expectations that concerns related to the spread of coronavirus
earnings will grow at a faster pace than increased (Graph 1.29). The euro has been little
previously thought. This largely reflects valuation changed and has remained in a relatively narrow
effects from the substantial decline in risk-free range over the past year or so. In contrast, the
Graph 1.27
Graph 1.26
Global Equities
US Corporate Bond Markets index Equity prices Price-to-earnings ratios*
ratio
% Corporate bond yields % 1 January 2015 = 100
9 9 160 21
United States
6 6 140 18
Non-investment grade
3 3 Europe
Investment grade 120 15
% Realised default rates %
Average 100 12
6 6
High yield bonds
China
4 4 80 9
Average
2 2
Leveraged loans 60 6
0 0 2016 2018 2020 2017 2020
2015 2016 2017 2018 2019 * 12-month ahead consensus earnings forecast
Sources: ICE Data is used with permission; JP Morgan; RBA Sources: Bloomberg; RBA; Refinitiv
S TAT E M E N T O N M O N E TA R Y P O L I C Y – F E B R UA R Y 2 0 2 0 17UK pound has appreciated since around the for competitive purposes, and to disclose
middle of 2019 as the near-term risk of a relevant information related to exchange rates
disorderly Brexit diminished. Measures of and external balances in a timely manner. The
volatility for the major currencies have US Government also determined that China
continued to decline and are at historically low would no longer be designated a ‘currency
levels. manipulator’. China’s foreign reserves have
The Chinese renminbi appreciated further remained stable at around US$3 trillion and
against the US dollar around the turn of the year, capital outflows have remained within the range
although it has depreciated more recently as experienced over the past couple of years.
concerns about coronavirus intensified
(Graph 1.30). Much of the earlier appreciation Financial conditions in many emerging
occurred alongside progress on phase one of markets have eased
the US–China trade agreement. Among other Emerging market equity prices continued to rise
things, the agreement includes pledges by both through to early January, but have fallen more
parties to refrain from devaluing their currencies recently as concerns about coronavirus
intensified. Local currency government bond
yields have declined and exchange rates have
Graph 1.28
been little changed (Graph 1.31). There have
US Dollar Funding Markets
bps
Overnight repo* US dollar funding** bps been inflows into emerging market equity funds
Three-month unsecured rates***
in recent months following an extended period
200 80
Japan
of outflows. This easing in financial conditions
Secured overnight
financing rate (SOFR) reflects a range of factors including the
100 40 continued accommodative global financial
environment and policy easing by many
Euro area UK
0 0 emerging market central banks during 2019 and
early 2020.
-100 -40
M J S D M J S D M M J S D M J S D M J While financial conditions in emerging markets
2018 2019 2020 2018 2019 2020
* Spread to effective fed funds rate have generally eased, the outbreak of
** Reflects cost of USD funding in the cross-currency swap market
*** Spread to OIS coronavirus has introduced a new source of
Sources: Bloomberg; RBA; Refinitiv
uncertainty and risks remain for some
Graph 1.29
Graph 1.30
Nominal Trade-weighted Exchange Rates
1 January 2015 = 100 Chinese Exchange Rates
index index index yuan
Japanese yen
120 120
110 6.2
Yuan per US$
110 110 (RHS, inverted)
US dollar 105 6.6
100 100
Euro
100 7.0
90 90
Trade-weighted index*
UK pound (LHS)
80 80 95 7.4
2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020
* Indexed to 1 January 2014=100
Sources: Bank of England; BIS; Bloomberg; Board of Governors of the
Federal Reserve System Sources: Bloomberg; China Foreign Exchange Trade System; RBA
18 R E S E R V E B A N K O F AU S T R A L I Aeconomies with specific political and/or The outbreak of coronavirus has
macrofinancial vulnerabilities. Social unrest and affected commodity prices
political uncertainty have increased in Latin The iron ore price has declined recently in
America in recent months. In Argentina, the new response to concerns about the near-term
administration has suggested that another outlook for demand, particularly from China,
round of debt restructuring is close to hand. The following the coronavirus outbreak (Graph 1.33,
central banks of Chile and Brazil have intervened Table 1.1). The outbreak has disrupted some
in the foreign exchange market to support their industrial production and construction activity,
currencies against recent depreciations which could reduce steel demand, at least in the
(Graph 1.32). In Turkey, the exchange rate has near term. Policy measures announced in China
continued to depreciate despite general in recent months to support the economy are
sentiment toward emerging markets turning expected to provide some support to steel
more positive in recent months. demand, although uncertainty about the
outlook for China and any potential policy
responses is likely to result in some volatility in
the iron ore price in coming months.
Thermal and coking coal prices have increased
Graph 1.31
since the previous Statement, but are around
Emerging Financial Markets
Excluding China 30 per cent lower than a year ago (Graph 1.34).
% index
Government bond yields*
8 140 Rising thermal coal supply from Indonesia,
Equity prices**
7 120 Russia and Australia has outpaced demand over
6 100
the past year; thermal coal demand has also
5 80
eased as competition from gas-fired and
index Exchange rates** %
100
(against the US dollar)
30
renewable electricity generation has increased.
90 20 Meanwhile, weaker steel production in some
80 10 other steel producing economies, including
70 0
Cumulative flows to funds*** India, has weighed on coking coal demand.
60 -10
2012 2016 2020 2016 2020
* Local currency bonds, weighted by market value
The prices of commodities that tend to be most
** 1 January 2012 = 100
*** Includes flows to exchange-traded funds and mutual funds responsive to changes in the outlook for global
Sources: Bloomberg; EPFR Global; IMF; JP Morgan; RBA
demand – particularly oil and base metals –
Graph 1.32 Graph 1.33
Emerging Market Exchange Rates Iron Ore Market
Against the US dollar; 2 January 2017 =100 US$/t Spot price* US$/t
index index
100 100
South Africa 50 50
120 120
Malaysia Mexico
India Mt Exports Mt
100 100 75 75
Chile
Indonesia 50 Australia 50
Philippines Russia
80 80 25 25
Brazil Brazil
Turkey Mt Mt
Chinese imports
60 60 100 100
90 90
40 40 80 80
Argentina
70 70
20 20 2015 2016 2017 2018 2019 2020
2018 2020 2018 2020 2018 2020 * 62% Fe Fines index; free on board basis
Source: Bloomberg Sources: ABS; Bloomberg; CEIC Data; RBA
S TAT E M E N T O N M O N E TA R Y P O L I C Y – F E B R UA R Y 2 0 2 0 19have declined recently in response to concerns Lamb prices have declined from their recent
about the potential impact of the coronavirus peak because of a seasonal increase in supply
outbreak on global activity (Graph 1.35 and and drought-related destocking.
Graph 1.36). This more than offset increases in oil Based on partial export price data (including the
prices earlier in the year, after the US–China prices of non-commodity exports), the terms of
trade agreement was announced and OPEC trade are expected to have declined in the
members agreed to deepen production cuts in December quarter reflecting lower iron ore and
the first quarter of 2020. coal prices for much of the period. The terms of
Prices for Australian rural exports have increased trade are expected to moderate further over the
in recent months. Wheat prices have been next couple of years as demand for bulk
supported by supply concerns stemming from commodities eases and more supply comes
unfavourable weather conditions in key global online.
producing regions, including in Australia. Beef
prices increased sharply in late 2019 because of
strong demand from Asia; however, prices have
declined more recently because of an increase
in supply owing to drought-related destocking.
Graph 1.34
Coal Prices
Free on board basis
US$/t US$/t
Thermal coal Hard coking coal
150 300
Contract
100 200
Spot
50 100
0 0
2012 2016 2020 2012 2016 2020
Sources: Department of Industry, Innovation and Science; IHS Markit; RBA
Graph 1.36
Graph 1.35
Base Metals and Rural Prices
Brent Crude Oil Price January 2014 = 100
US$/b US$/b index Base metals index
Zinc
150 150
125 125 Aluminium
100 100
100 100
Copper Lead Nickel
index Rural commodities index
75 75 Lamb
150 150
Beef
50 50
100 100
Wool Wheat
25 25 50 50
2010 2012 2014 2016 2018 2020 2014 2015 2016 2017 2018 2019 2020
Source: Bloomberg Sources: Bloomberg; Landmark; MLA; RBA
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