Reserve Bank of Australia June meeting minutes. Headlines via Reuters:
The RBA Board judged the case for holding rates steady stronger than for hikingNeeded to be
vigilant to upside risks to inflation, data suggested upside risk for
May CPIEconomic uncertainty
meant it was difficult to rule in or out future changes in policyRecent data not
sufficient to change outlook for inflation returning to target by
2026Judged still
possible to bring inflation to target while keeping employment gainsBoard saw downside
risks to the labour market, vacancy rates pointed to weaknessUnemployment rate
could rise quickly as it had done in the pastContinued rapid rise
in business insolvencies would be negative for jobsWise to give little
weight to upward revisions to household consumptionQ1 GDP growth had
been very weak, wage growth looked to have peakedHike might be needed
if board judged policy was not “sufficiently restrictive”August forecast
round would allow staff to carefully judge spare capacity in economyJudgements about
spare capacity were very uncertain, should be treated with cautionInflation
expectations still anchored, but market premia had drifted higherA material rise in
inflation expectations could require significantly higher rates
There isn’t much in these Minutes to sway the case for a move to hike rates at the next meeting, in August. The August meeting will be right after the next official reading on quarterly CPI, due July 31.
The headline I popped on the post is probably the most interesting point given the inflation expectations data we had earlier:
Australian inflation expections have jumped their highest in 9 months
Those expectations, from the weekly survey, won’t carry a huge amount of weight in RBA discussions, but they won’t be ignored either.
I think the TL;DR on these minutes is we have to wait for the CPI report on July 31 for a guide to what the Bank will do at its August, on the 5th and 6th, meeting.
AUD is up a touch, not a lot of movement during the session here following the drop on Monday, US time:
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From the day of the statement:
RBA leaves cash rate unchanged at 4.35%, as expectedRBA’s Bullock: We did not consider the case for a rate cut todayRBA’s Bullock: We need a lot to go our way to bring inflation back to range
This article was written by Eamonn Sheridan at www.forexlive.com.
