Commodity price hope in RBA outlook

(Australian Associated Press)

 

The Reserve Bank of Australia board considered there may be a better-than-expected boost to the economy from higher commodity prices when it met to review its official interest rate earlier in March.

The RBA board took the view that the economic benefits for Australian households from higher coal and iron ore prices in the second half of 2016 were likely to be limited because of the large proportion of dividends from resource companies that flow to overseas shareholders.

“However, the fact that the recent increases in commodity prices had been supported by a pickup in global demand raised the possibility that commodity prices could be higher than expected, in which case the flow-through to the domestic economy could be larger than currently forecast,” the minutes of the March meeting, released on Tuesday, showed.

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