According to Rob Carnell, Chief Economist at ING, Minutes from the RBA’s July meeting can be loosely summed up as, “1Q17 was not great, 2Q17 is looking better, and 2H17 looks as if it could be better still”.
“Beyond this, there was little to be read into the minutes that could be viewed as strongly challenging the market expectation for nothing from the RBA until 1/2Q 2018, though bank bill futures implied rates have been creeping up for the early part of 2018, and this is a trend that is likely to continue.”
“The other interesting diversion was the report of the discussion about the equilibrium nominal cash rate. The consensus was that this was about 3.5%, which implies that the RBA’s current stance, was very accommodative – even taking into account the low rates of wage and inflation growth. With a lot of normalisation theoretically to be done, this is one argument the RBA may use to justify an earlier rate hike. It is not inconceivable that they will do so before the end of this year. And with China motoring strongly in the background, this argument will likely gain traction in the months ahead.”
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