Chief Economist of Westpac Bill Evans with his take on the Reserve Bank of Australia November Minutes
(I posted on these, here, a little earlier)
In brief:
- Minutes provided no significant surprises
- Most significant change in these minutes relative to the October minutes was around the growth outlook for the Asian region: "Growth in Asia had slowed by more than had earlier been expected" .... However the Board has not changed its view on the terms of trade - "outlook for Australia's terms of trade was little changed
- On the domestic economy the themes are largely unchanged
- Commentary on the labour market remains positive
- Repeats the forecasts which show underlying inflation holding at 2% in the year to June next year but picking up to 2½% over the whole of 2016
The dynamics of a need to provide further stimulus are likely to evolve in the event of a further unexpected collapse in the terms of trade. ... fall in the terms of trade would most likely significantly weaken income growth which may not be sufficiently offset by a lower savings rate. Ongoing improving employment conditions would avert the need for lower rates but here the risk would be a feedback on confidence from this terms of trade effect onto employment decisions.
... We will continue to monitor these issues whilst emphasising that if our central view of steady rates is going to be wrong over the course of the first half of 2016 it will be that rates must be lower rather than higher.