I posted up a couple of takes on the Reserve Bank of Australia monetary policy board meeting statement (July 4) already:

  • RBA recap - no forward guidance (but here's what to watch ahead)T
  • RBA recap - 4 changes, and 2 notable absences

This via Barclays (bolding mine):

  • The RBA refrained from any discussion around policy normalisation
  • statement was almost unchanged from that of the previous month
  • While the central bank reiterated its view of an expected gradual strengthening in the economy, it dropped the reference to GDP expanding slightly above 3% over the next couple of years. This feels like an important change in tone, and suggests to us that the RBA may revise down its GDP growth forecast in the August Statement of Monetary Policy. However, this is likely to be a technical downgrade and not a major change in outlook, in our view.

Global economy

  • RBA continued to state that the "broad-based pick-up" has continued
  • noted headline inflation rates have declined recently
  • wage growth remains subdued in most countries, as does core inflation


  • RBA sees consumption growth to remain subdued, reflecting slow growth in real wages and high levels of household debt
  • Continued to point to mixed indicators of labour market - strong employment growth and low wage growth. It did flag that various forward-looking indicators point to continued growth in employment over the period ahead, but also pointed out that wage growth is likely to remain low for a while
  • Expects inflation to increase gradually as the economy strengthens, although the drop in oil prices and a strong currency will likely keep headline inflation manageable for now
  • housing market, the guidance was broadly unchanged from the previous month.


  • Expect the RBA to maintain a neutral stance
  • We expect the ongoing improvement in employment and aggregate wage bills to eventually provide a boost to consumption growth.
  • RBA remains concerned over the low wage growth / low household consumption cycle and will be watching this trend carefully in coming 6-12 months, in our view
  • We believe that, more than headline growth, if the trend of improvement in the labour market continues and wages start to rise at the margin, this may create conditions for the RBA to normalise policy, but not before those trends are firmly established.