RBA minutes will drop today at 0130GMT (11.30 am Sydney time)
They are a little more interesting than usual given the recent changing views at the bank. Since the switch to 'the next move is more to be a cut than a hike' (I'm paraphrasing from Lowe's speech in March) interest is heighitened in Bank communications.
In a nutshell the Bank is watching (mostly) developments in the labour market and housing market. We get inflation data from Australia next week, the Bank has missing its target on core inflation for years. Any further drop will give them something else to focus on.
Quick thoughts from some of the local banks on the release today:
ANZ:
- Given the change in the last paragraph of April's post meeting statement there will be a lot of interest in the Minutes.
NAB:
- RBA Deputy Governor Debelle's recent speech on "The State of the Economy" suggests the Bank is still struggling to reconcile a strong labour market with weak activity, where the business surveys are somewhere in between. At this stage, the RBA is waiting to see how this tension is resolved as this will "play a critical role in whether [the RBA will] continue to make satisfactory progress in achieving the goals of full employment and the inflation target".
- In this context, we expect that the board minutes will still state that, "members agreed that there was not a strong case for a near-term adjustment in monetary policy", notwithstanding a much worse-than-expected outcome for Q4 GDP growth.
- That said, we think that the minutes could indicate the increased uncertainty/data-dependence of the RBA that was captured in the tweak to the April interest rate decision, which said, "The Board will continue to monitor developments and set monetary policy to support sustainable growth in the economy and achieve the inflation target over time."