RBA Minutes: “Very significant” monetary support to be needed for some time

Ross J Burland FXStreet

According to the minutes of the latest Reserve Bank of Australia meeting, the central bank believes it will take a significant and sustained tightening in the labour market to lift inflation to more comfortable levels, a tough task that could take years to achieve.

More minutes

"Very significant" monetary support to be needed for some time.
Cash rate to be kept at 10 bps as long as is necessary.
Will not raise cash rate until inflation sustainably in 2-3% target band.
Does not expect to reach targets for unemployment, inflation until 2024 at the earliest.
A sustained period of labour market tightness needed to lift wage growth, inflation.
Liaison suggested some time before wage freezes to end, public sector pay also restrained.
The board concluded ending RBA bond-buying would put "significant" upward pressure on A$.
A$ "noticeably" lower than would have been without November stimulus package.
The board noted RBA balance sheet to GDP still lower than most other advanced economies.
Benefits from low rates outweighed risks from more leverage, rising house prices.
Few signs of deterioration in home lending standards, would be monitored closely.

Minutes of the Reserve Bank of Australia's (RBA) February policy meeting released on Tuesday showed the Board recognised that wage growth had been too subdued for years before the pandemic imposed its own restraints on pay.

There was less expected from the minutes this time around given that the central bank's governor, Philip Lowe, has spoken extensively since the Board meeting.

As a result, AUD is little changed on the release.

AUD/USD was trading at 0.7790 on the release before popping to a fresh high of 0.7794 soon after the minutes were digested.

Description of the RBA 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.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.