The next Reserve Bank of Australia meeting is on July 5, statement due at 0430 GMT.

Westpac published their leading index (for May) earlier, main points:

  • The six-month annualised growth rate in the Westpac-Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, fell from 1.09% in April to 0.58% in May.
  • Index still indicating above trend growth for 2022.
  • Consumer sentiment falls, equity market sell-off significant drags.

    • Westpac, from that report, on the Reserve Bank of Australia:

    • Yesterday the Bank released the Minutes to the June Board meeting. The key theme was that “the level of interest rates was still very low for an economy with a tight labour market and facing a period of higher inflation”.
    • We expect the Board will decide to follow the 50bp rate increase in June with a further 50bp increase in July.
    • That would still only have the cash rate at 1.35% – below the 1.5% we saw in the three years from August 2016 to May 2019 when the inflation rate was persistently below the bottom of the 2-3% range.
    • We also assess that 1.35% is below the neutral setting for policy indicating that even after the 50bp increase we expect for July the cash rate will continue to be stimulatory. Given the tight labour market and rising inflation further monetary tightening can be expected through 2022.

    The cash rate target:

    rba cash rate point 85 percent 09 June 2022