RBA minutes: Next move in rates is likely to be up - Westpac

Andrew Hanlan, Research Analyst at Westpac, explains that the broad themes and tone of the June Minutes are consistent with earlier statements by the RBA.

Key Quotes

“The RBA still anticipates that the next move in rates is likely to be up, as stated by the Governor on June 13, but this phrase has been omitted from these Minutes.”

“The final paragraph in the Considerations for Monetary Policy section was along the lines of the corresponding paragraph in the Decision Statement by the Governor following the June meeting. The key sentence is: “Further progress in the period ahead in reducing unemployment and returning inflation to the target was therefore expected, although this progress was likely to be gradual”.”

“On the global economy, the Minutes note greater uncertainties, including: political developments in Italy; developments in some emerging markets; and the ongoing trade tensions.”

“On the domestic economy, the RBA’s central case view and forecasts are unchanged, “members noted that recent data had been consistent with the Bank’s central case forecast for GDP growth to pick up to be above 3% by the end of 2018”.”

“For the RBA and other forecasters, the outlook for consumer spending remains a key uncertainty, at a time of high debt levels and weak wages growth. On jobs growth, the RBA expects the current slowdown to be temporary, with the Minutes pointing to the positive forward indicators, which would, in the view of the RBA, suggest a gradual decline in the unemployment rate and, in time, a gradual lift in wages growth.”

“Lastly, comments on housing were along the lines of earlier statements. In short, the sector is cooling and APRA’s supervisory measures and tighter lending standards are view by the RBA as being helpful in containing the build-up of risks on household balance sheets.”

“We remain of the view that the RBA will be on hold throughout 2018 and 2019.”