RBA minutes: Rate cut would be appropriate if no further improvement in labour market

Author: Eamonn Sheridan | Category: Central Banks

Reserve Bank of Australia meeting minutes, May 2019

  • interest rate cut would be "appropriate" if no further improvement in labour market
  • board agreed further drop in jobless rate would be consistent with inflation target
  • important to pay close attention to labour market over period ahead
  • minutes drop line that board saw "no strong case" for a near-term move in policy
  • board noted economic forecasts were based on market assumption of lower rates
  • outlook would thus be less favourable without an easing in policy over next 6 months
  • board recognised lower rates would have less of an impact than in the past
  • but lower rates would still put downward pressure on AUD, reduce mortgage repayments
  • AUD at lower end of range of last couple of years, falling yields offset firm commodity prices
  • some leading indicators of labour demand had eased, outlook more mixed
  • forecasts saw spare capacity in the labour market for next couple of years
  • Q1 inflation noticeably lower than expected, housing having disinflationary effect
  • risks to household consumption growth "tilted to the downside"
  • GDP growth to be supported by higher exports, new mining investment projects
  • risks to the global economy remained tilted to the downside
  • significant global uncertainty over outlook for China, trade tensions
A dovish set of minutes indeed, but do they add much to what we already know? And, given the developments since the meeting (election results in, APRA moves just today) its probably not unreasonable to hold off until we hear from Governor Lowe at 0310GMT before making up one's mind on a June cut. 

Still to come:
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