A quick preview of the RBA Minutes from Credit Agricole, this is via eFX
The focus shifts to the release of the November RBA minutes. Recall, the RBA at this month's meeting left the cash rate unchanged at 2.0%, maintaining its broadly neutral tone. The Bank left the door open to further rates cuts but only in the context of a fresh deterioration in the inflation outlook.
However, the Bank also noted that the prospects for the economy have firmed a little over recent months, noting the sharp improvement in the labour market.
The meeting occurred before the solid October employment release so it is unlikely to contain new information. Even so, we think the pickup in labour market conditions and weaker potential growth (relative to pre-crisis levels) argues that the RBA has less wiggle room to ease over the coming months. What's more, we think the minutes will stress the importance of housing, owing to the general frothiness in home prices.
In this regard, we think the RBA would prefer to let prices moderate from current levels and a fresh easing would only contribute to a rise in housing prices. The minutes will likely support this view.
