RBA minutes: Risk of Nov cut still exists

FXstreet.com (Barcelona) -The RBA minutes has been perceived 'neutral' by the market, with the Central Bank stating that the RBA saw more chance of ‘somewhat weaker’ growth next year. On the forecast profile for mining investment, the RBA says 'it might not be quite as strong as previously expected'. On the rate decision, the RBA Minutes noted: "It was too early to see the full effects of earlier reductions in interest rates." RBA saw slower pace of global growth, further slowing in China. Overall, the RBA's meeting minutes is dovish but most drivers are already priced in. the possibly of an additional cut in November still exists.

From RBA on the mining sector: "Resource investment could peak earlier, and at a lower level, than had previously been forecast. While there remained considerable uncertainty about the outlook, the lower resource investment profile suggested growth in demand and output over the coming year could be below previous forecasts. Mining companies reluctant to commit to new projects, discussed effects of slower mining investment on tax and employment Members noted that, broadly in line with expectations, non-mining investment had declined in the June quarter.

From RBA on the rate decision: "The Board had observed that the effects of earlier reductions in the cash rate were still working through the domestic economy, and that the outlook for inflation was consistent with the target over the next one to two years. Members concluded that the current assessment of the inflation outlook provided scope to adjust policy in response to the softer growth outlook. Therefore, at this meeting the Board judged that it was appropriate for the stance of monetary policy to be a little more accommodative, thereby providing some additional support to demand over the period ahead."

In view of NAB, "an unexpectedly high print for core CPI readings next week is what stands between the RBA and a further rate cut on November 6." In other words, NAB expects another rate cut in November unless CPI comes above expectations.

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