Westpac Chief Economist Bill Evans on the Minutes

  • Provided no real surprises

On the easing bias:

  • (In) the Governor's statement following the March meeting ... we interpreted .. a clear strengthening of the easing bias .... It is reasonable to argue that knowledge of the stronger GDP may have allowed the Board to retain its earlier more modest easing bias.

On Capex:

  • The minutes point out that roughly half of non-mining investment is not covered by the Capex survey and that it had on occasions proved to be unreliable. Further boosting the view around business is the observation that surveys continue to point to conditions and capacity utilisation remaining above average levels.

On wages:

  • The minutes have qualified the assessment that low wage growth points to some spare capacity in the labour market. They speculate that weak wages growth may be due to increasing globalisation.

China:

  • concludes that China's low household debt and low level of foreign currency debt gave it much more protection from a crisis than in other emerging economies.

Conclusion

The minutes provide some insight into expectations around GDP; reaction to the surprise rise in the unemployment rate in January; and the weak Capex report.
The 'spin' on all of these developments indicates a Bank that is comfortably on hold.
However clearly considerable attention is being paid by the Bank to developments in China and sudden adverse developments in that region would undoubtedly prompt consideration for policy change.
We will have to await new communication from the Bank to assess its degree of unrest around the recent sharp jump in the AUD.
Westpac continues to expect that the Bank will remain on hold for the remainder of the course of 2016.

(Bolding is mine)