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Australia central bank debated whether to delay rate cut to March

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Australia's central bank board debated on whether to cut interest rates this month or next, but judged a move in February was the preferred course to help steer the economy out of a prolonged period of sub-par growth.

In minutes of the Feb 3 meeting, when the Reserve Bank of Australia (RBA) cut its cash rate by a quarter point to a record low 2.25 percent, the central bank said members were told that growth risked staying below trend through 2015 if rates were left unchanged.

"On the basis of their assessment of current conditions and taking into account the revised forecasts, the Board judged that a further reduction in the cash rate would be appropriate to provide additional support to demand," the minutes said.

"In deciding the time of such a change, members assess arguments for acting at this meeting or at the following meeting. On balance, they judged that moving at this meeting, which offered the opportunity of early additional communication in the forthcoming Statement on Monetary Policy (SOMP), was the preferred course."

The minutes gave no clear guidance on whether the RBA would follow up with another rate cut next month, although debt markets imply a better-than-evens chance of such an outcome.

In the SOMP, which was released a few days after the meeting, the RBA trimmed its growth forecast by a quarter point for 2015 to 2.25-3.25 percent, and to 3-4 percent for 2016.

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Members were also briefed on possible measures such as increased capital requirements if recent regulatory action to address increasing speculative activity in the housing sector was not met. They agreed that developments the housing market would bear "careful monitoring".

On the local dollar, the RBA said it remained above most estimates of its fundamental value, particularly given the big falls in key commodity prices.

"Members agreed that a lower exchange rate was likely to be needed to achieve balanced growth in the economy," the minutes said.

The Board also discussed policy easings by other central banks, including the European Central Bank, Swiss National Bank and Bank of Canada.

They noted that movements in the Australian dollar would be affected by market expectations for policy action abroad, as well as at home.