"Members commenced their discussion by noting that the data on activity and inflation in the global economy had been more positive over recent months. There had been a broad-based pick-up in surveyed conditions in manufacturing across economies as well as in growth in industrial production and merchandise trade. GDP growth in Australia's major trading partners had increased a little over recent quarters and forecasts for 2017 and 2018 had been revised a little higher, partly because of expectations of expansionary fiscal policy in the United States. However, trading partner growth was still expected to ease slightly towards the end of the forecast period, reflecting a projected slowing in growth in China in the medium term.

Members observed that inflation in the advanced economies had continued to increase recently, mainly as a result of higher oil prices. Some measures of inflation expectations had also risen in late 2016. These developments and a decline in spare capacity were expected to flow through to higher core inflation in the advanced economies over time. Inflation rates were still below central banks' targets in most countries.

Members started their discussion of the domestic economy by noting the outcome for GDP growth in the September quarter. The 0.5 per cent decline in real GDP in the quarter was considerably weaker than had been expected, reflecting some temporary factors, including disruptions to coal supply and bad weather. Slower growth in consumption had also been a factor. This weakness was not expected to have continued into the December quarter and the forecasts for quarterly GDP growth were little changed. GDP growth was expected to pick up to around 3 per cent in year-ended terms later in 2017, and to remain above estimates of potential growth over the rest of the forecast period".