RBA Minutes: Little more downbeat – TD Securities

Analysts at TD Securities note that the RBA’s September meeting Minutes were published today and they were a little more downbeat than the Sep statement suggested.

Key Quotes

“Overall the minutes support a further easing in the cash rate, but it really comes down to timing. The RBA outlined 3 things it is looking at in determining its monetary policy decision.

1. Labour market – recent outcomes suggested that spare capacity remained in the labour market, but this is a view the RBA has stated for sometime. It's comments that the upward trend in wages growth had 'stalled' is supportive for a cut.
2. Housing - Established housing market showed further signs of a turnaround but residential building approvals suggested further weakness in dwelling investment likely (members noted this could sow the seeds of an upswing at some point). Mixed outlook.
3. GDP – the RBA anticipated an outcome near 0.5% based on partial data, which is what we got but this falls short of the RBA's 0.75% forecast as per the Aug SoMP.”

“Overall the RBA has room to cut the cash rate as it sees downside risks dominating in the near term. It really comes down to timing. The Bank did say it will monitor developments globally and domestically. Globally the outlook appears to have improved, global data on balance has been beating forecasts and prospects on trade talks have improved at least in the near term. However the RBA would be clearly disappointed that following 2 rate cuts and tax cuts, we have not seen more signs of green shoots. We stick to our Nov call for the RBA to cut but if we get a poor jobs print on Thurs, then a move next month should be more a 50/50 proposition, not ~30% as it is currently. The fact that the RBA removed 'the accumulation of additional evidence' suggests the bar to cutting may have been lowered.”