RBA Minutes: No hurry to tighten policy settings

The Reserve Bank of Australia's minutes from its April meeting has been released.

Traders will be looking for them to provide colour on recent economic developments that have surprised to the upside and supported AUD in recent weeks. 

Key notes

• Board remains committed to doing what it reasonably can support the Australian economy.
• Board would maintain "highly supportive" monetary conditions until employment, inflation goals were achieved.
• Does not expect to reach targets for unemployment, inflation until 2024 at the earliest.
• The board would maintain cash rate at 10 bps for "as long as necessary".
• Will not raise cash rate until actual inflation is sustainably in 2-3% target band.
• Board remains committed to three-year yield target of 10 bps.
• Board prepared to undertake further bond purchases, beyond a$200 bln announced, if it would assist with progress towards its goals.
• Would consider extending low-cost funding facility for banks if there were marked deterioration in funding and credit conditions. no such signs currently.
• Wage, price pressures remain subdued, expected to remain so for several years.
• Demand for new business loans remained subdued.
• "Carefully" monitoring trends in housing borrowing, mortgage lending standards as house prices surge
• Market conditions had improved over the prior month, in part owing to bank's bond purchases
• AUD has depreciated from recent highs to be back around levels at the turn of the year
• Preliminary data suggests March quarter Gross Domestic Product was likely to have recovered further to around pre-pandemic level, earlier than previously expected.
• Roll out of public investment programmes over h1 2021 would be slower than foreshadowed in state budgets.
• Reduced uncertainty, higher net wealth to support household consumption recovery.
• Employment had returned to pre-pandemic levels "considerably faster than expected".
• Likely full effect of end of government's wage subsidy programme -'jobkeeper' - would become apparent over several months.

Meanwhile, AUD/USD is taking flight towards prior resistance o the hourly chart in Asia today, higher by 0.26% at the time of writing. 

Description of the minutes

The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision.

The minutes give a full account of the policy discussion, including differences of view.

They also record the votes of the individual members of the Committee.

Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.