The RBA minutes: Board prepared to ease policy further if needed to support growth, jobs

The Reserve Bank of Australia came with the Minutes for the RBA Board’s 1 October meeting.

Members commenced their discussion of global economic conditions by noting that heightened policy uncertainty was affecting international trade and business investment. This had continued to be apparent in a range of indicators, including new export orders and investment intentions. Conditions in the manufacturing sector had remained subdued, partly because of ongoing US–China trade tensions. These tensions had led to a contraction in bilateral trade between the United States and China, which was resulting in the diversion of some activity to other economies. Members noted that the trade and technology disputes continued to pose significant downside risks to the global economic outlook.

The RBA is prepared to ease further if needed to support growth and jobs. AUD/USD is a touch lower (-0.15%) on the main take away points as follows:

The Minutes

• Board judged case for easing at Oct meeting outweighed arguments against a move.
• Board prepared to ease policy further if needed to support growth, jobs.
• Reasonable to expect extended period of low rates would be required.
• Board members noted trend to lower rates globally.
• Discussed possibility rate cuts might have less impact than in past.
• Judged lower rates would still have an impact through the A$.
• Members noted export demand had been supported by lower level of the A$.
• Discussed risk that low rates would over-inflate home, asset prices.
• Saw limited risks of excessive borrowing for now, but warranted monitoring.
• Board discussed case for keeping rate cuts in reserve for emergencies.
• Decided lower level of rates best way to lessen impact of any negative shocks.
• Mining, housing sectors seemed to have reached "turning points".
• No sign as yet that household consumption responding to rate cuts, tax rebates.
• Strong jobs growth being met by equally strong increase in labour supply.
• Leading indicators point to slowdown in jobs growth in quarters ahead.
• China-US trade, tech disputes a significant downside risk to global outlook

About 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.