Reserve Bank of Australia February 2019 meeting minutes

And consumption not the only one ….

Key points (via Reuters summary) :

  • Monetary Policy Board saw "significant uncertainties" on the economic outlook
  • Board saw scenarios where interest rates could eventually rise, or fall
  • probabilities around these scenarios were more evenly balanced than before
  • no strong case for near-term move in rates, better to be a source of stability
  • current policy should allow for progress on unemployment and inflation
  • members would continue to "assess the outlook carefully"
  • board spent some time on housing market, price falls large by historical standards
  • given past rise in prices, the recent fall should have a only a small economic impact
  • however "if prices were to fall much further" it could weaken consumption, gdp
  • outlook for consumption a "key uncertainty" for policy
  • notable drop in home loan approvals by banks due to weaker demand, tighter credit
  • pipeline of dwelling investment large, but likely to decline faster than first thought
  • labour market stronger than other economic data
  • board noted downside risks to global economy had increased
  • signs china growth had slowed more than implied by gdp data
  • trade tensions a "material risk" to the global outlook

Full text: Minutes of the February 2019 Monetary Policy Meeting of the Reserve Bank Board

AUD up a few points on the minutes hitting screens, but not a lot in it, up 15-odd points at most (as I update).

Note the line the RBA sees itself as a source of stability. Sounds good … but given the RBA is ignoring one of their (only) two mandates (ie consistently missing on the inflation target for years and consistently getting inflation forecasts wrong, by overestimating) I'd suggest not knowing why the RBA is ignoring this part of its mandate is another source of uncertainty, not stability.

Speaking of stability …. or instability rather. Why do the Minutes mention

  • Board saw scenarios where interest rates could eventually rise, or fall
  • probabilities around these scenarios were more evenly balanced than before

and yet the 'more even balance' did not make it into the accompanying statement to the meeting announcement? Lowe dropped that bombshell the next day in his speech. Lulled the market, then smacked it … not very enhancing to stability. TD even said it was misleading.

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For background:

and still to come: