As expected:
Financial Markets
Members noted that interest rates were very low around the world, with a number of central banks having eased monetary policy over recent months in response to downside risks to the global economy and subdued inflation. Market expectations for further policy easing by central banks had been scaled back over previous months, with concerns about the downside risks receding a little. The US Federal Reserve had indicated that any further reduction in the federal funds rate would require a material change in the economic outlook. Reflecting these developments, market pricing had pointed to a narrowing in the degree of uncertainty around the expected path for the federal funds rate. Globally, long-term government bond yields had remained at very low levels, but had risen slightly in recent months as the prospects for further easing in monetary policy had diminished.
Financing conditions for corporations remained very accommodative. Robust demand for corporate debt had seen spreads narrow between corporate bond yields and government benchmarks. US equity prices had risen to new highs over the prior month, and had increased significantly since the start of the year relative to corporate earnings. Australian equity prices had also increased over the month, with the ASX 200 returning to the highs reached in July.