RBA Minutes: Will continue to do what was necessary to achieve the three-year yield target


The Reserve Bank of Australia has published the minutes of its April policy meeting.

Casting minds back o the April statement, the RBA's comfort to taper its bond purchases lifted AUD significantly higher so markets are looking for more clarity around this either from the minutes or later today from a Livestream on RBA site titled, “Economic and Financial Update”.

RBA Minutes

  • The board remained committed to supporting jobs, incomes and businesses.
  • Australian financial system remained resilient.
  • The coordinated monetary and fiscal response would soften expected economic contraction.
  • Trequency of longer terms bond operations to be adjusted as necessary according to market conditions.
  • Various responses were providing considerable support to Australian households and businesses.
  • Likely that smaller and less frequent purchases of government bonds would be required.
  • The policy package had helped to lower funding costs and stabilise financial conditions.
  •  To do what was necessary to achieve the three-year yield target.
  •  The bank would continue to do what was necessary to achieve the three-year yield target.
  • Deferrals and cancellations of business investment plans had been a theme in discussions with liaison contacts.
  • These effects on GDP were expected to be partially offset by stronger public demand and the introduction of income support measures.
  • GDP could fall significantly in the June quarter and remain subdued in the September quarter.
  • Although jobkeeper subsidy was expected to increase the number of people remaining employed, household incomes were expected to be much lower.
  • Household consumption spending was expected to be much lower than usual in the June quarter.
  • It was unlikely that support packages would provide a strong boost to spending in the near term given the broadening shutdown of non-essential Activities and the restrictions placed on household activities.

AUD reaction

AUD/USD had been testing 0.6390 overnight but then rolled over to 0.6315 and back to around Friday’s close ahead of the minutes. Immediately on the release of the minutes, AUD/USD was trading at 0.6327 as the minutes were being digested. 

More to come...

Governor Lowe will also deliver a speech titled “Economic and Financial Update” later in the day. 

Description of 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.

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