Insightful comments via Mizuho on what to expect from the Reserve Bank of Australia August meeting minutes due at 11.30am Sydney time here in Australia on 15 August 2023
- 0130 GMT and 9.30pm (Monday evening) US Eastern time
The RBA's recent Statement On Monetary Policy (quarterly publication) displayed a sense of narrowing policy space.
- First, inflation forecast was upgraded with estimates for June 2025 ticking up to 3.1% from 3.0% in May's publication despite actual Q2 inflation outturns clearly coming in below estimates.
- Second, growth forecast trajectory was downgraded over the forecast horizon from H2 2023 to H1 2025 and comes in spite of upward revision on population growth assumptions.
- Third, it is notable that the forecast in the latest August publication was conditional on the RBA's peak cash rate being at 4.25% which is marginally higher than the current 4.10% and much higher than the previous May assumption of 3.75%.
The upcoming jobs report is unlikely to portray a substantial change in the tight labour market situation. Hiring intentions continue to remain resilient but supply constraints and skills mismatch may imply a slower pace of job gains. That said, given retail sales weakness, some shedding of temporary workers may be on the cards.
All in, amid two consecutive rate holds, the upcoming RBA minutes while leaning towards growth concerns may find it tough to give up its hawkish inflation talk especially given Governor Lowe's latest allusion to "Calibration Phase" for monetary policy.
