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Australia’s central bank held interest rates steady at its first policy meeting for 2017, as expected, but struck a relatively upbeat tone about global economic conditions and a recovery for the domestic economy.

The Reserve Bank again voiced its concern over the state of domestic labour, subdued inflation and the property market, but generally struck an optimistic tone around global and domestic growth. It did note, though, that while above-trend growth is expected in a number of advanced economies, uncertainties remain.

Policymakers pointed to an improvement in conditions in the global economy over recent months, particularly China, Australia’s biggest export market.

The RBA also noted the rise in global long-term bond yields, adding that “Interest rates have increased in the United States and there is no longer an expectation of further monetary easing in other major economies.”

This is the RBA’s first meeting since the release in December of GDP data that showed the Australian economy shrank in the September quarter, the first contraction since 2011. That stirred fears the country might slip into recession for the first time since 1991, with subsequent data last month showing consumer price growth was weak in the December quarter.

However, confidence has been given a boost thanks to producer price data, which has pointed to a potential uptick in consumer prices over coming quarters, as well as a record trade surplus in December that should show Australia managed to avoid a recession in the back half of 2016.

The RBA acknowledged that, and said today “A return to reasonable growth is expected in the December quarter.”

That said, minutes from the RBA’s December policy meeting reinforced that the “mixed” state of the Australian labour market is front of mind for the central bank. Wage growth has remained low, and the most recent readings for December showed the unemployment rate ticking up 0.1 percentage points to 5.8 per cent as well as subdued jobs growth.

Those concerns were evident again in today’s policy statement, but with wording largely unchanged from late last year.

The Australian dollar oscillated in a range of half of 1 percentage point immediately following the release, but had overall firmed to be 0.2 per cent higher at $0.7674.

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