Reserve Bank of Australia Board Minutes for November

  • Subdued inflation may afford some scope for further easing of policy
  • "Very low" interest rates supporting household consumption, home building
  • AUD is adjusting to commodity decline boosting demand for domestic production, services
  • Spare capacity to persist for some time, inflation to be lower than expected
  • Mortgage rate rises lessened policy support slightly, still accommodative overall
  • Tighter regulations helping contain risks from housing market
  • Employment stronger than expected, vacancies point to continued growth
  • Household consumption to add significantly to demand in next two years
  • Pick up in demand, low AUD to eventually drive non-mining investment but timing uncertain
  • Drag from mining investment likely to have run its course by end 2017
  • Asia had slowed more than expected, likely to be longer lasting than thought

Reuters quick headlines

Full text: Minutes of the November 2015 Monetary Policy Meeting of the Reserve Bank Board

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At first glance there is nothing much surprising, but the market is focusing on "Employment stronger than expected, vacancies point to continued growth" and is thus taking the AUD a little higher. This comment from the Minutes suggests the hurdle for further easing has been raised.

Also, note the RBA refers to interest rates as 'very low' ... again this is not suggestive that further easing is coming any time soon. Of course, it doesn't preclude further cuts, but it is indicative of RBA thinking.

I'd also add ... "Subdued inflation may afford some scope for further easing of policy" ... using 'may' is also more evidence that further easing is not on the RBA's mind at present. The "Household consumption to add significantly to demand in next two years" ... another vote of confidence in the economy from the bank.

The Minutes are leaning to more optimistic assessment of the Australian economy. I am already seeing the 'hawkish' word bandied about ... mmm ... different assessments for different folks, but I would agree these Minutes are very much indicative of a much less dovish Board.

And, let's not get carried away with the 'hawkish' sentiment ... since this meeting we have heard straight from Governor Stevens himself saying "If policy were to change, it would almost certainly be an easing".

AUD:

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Posts from the day of the November decision and announcement:

  • RBA statement: Australian dollar is adjusting to lower commodity prices
  • RBA's Statement on Monetary Policy - analyst response
  • Comparing the RBA October and November statements
  • RBA Statement today ... "What does it all mean?"