Doubts over China commodity demand, local consumption led to RBA rate cut

Sydney

THE Reserve Bank of Australia said doubts about a pickup in domestic spending and China's appetite for raw materials prompted this month's decision to lower interest rates, and reiterated that the Aussie dollar remains too high.

"There was considerable uncertainty around the timing and extent of the expected increase in household consumption growth and non-mining business investment," it said in minutes of the first meeting of the year, where it debated whether to cut straight away or wait a month. There was also a lack of clarity on "the outlook for the Chinese property market and its implications for Chinese demand for commodities," it said.