• The board noted conditions in some emerging markets had become more unsettled
  • Reasonable prospects that growth in major trading partners would pick up in 2014
  • Possible household consumption could outpace income thanks to house, equity prices
  • Liaison suggested retail sales through Christmas were reasonably good
  • Recent data more positive on consumption, home building, business conditions and exports
  • The board recognised that labour market conditions tended to lag economic growth
  • Leading indicators of employment had stabilised, but pointed to only moderate growth
  • Lower AUD, if sustained, would be expansionary for economy
  • Inflation puzzle could also reflect lower AUD, lag in impact from slower wages
  • The board felt Q4 inflation figures likely contained ‘some noise’ as well as signal
  • The board saw further signs policy stimulus was having its intended effects
  • Period of stability in interest rates likely most prudent course

(preview is here)

Headlines via Reuters

Full text is here Minutes of the February 2014 Monetary Policy Meeting of the Reserve Bank Board

AUD had an immediate dip to sub 0.9020 but instantly back higher (if you are looking for a definition of ‘whipsaw’ … look no more) to run into offers around 0.9060. If it sustains around 0.9060 then the stops above will come into target.

Interesting comment on the ‘puzzle’ facing the RBA re inflation …

The Board noted that it was likely the inflation reading contained some noise as well as some signal about inflationary pressures, but also presented something of a puzzle in interpreting the mix of activity and price data.

The RBA are not afraid to admit they are puzzled by the inflation developments … They don’t pretend to be all-knowing.

Overall, nothing much we didn’t already know in these minutes.