As I wrote about on the first Tuesday of the month, the RBA FINALLY pulled the trigger and cut the cash rate from 1.5% to 1.25%.
Well all today’s RBA minutes do is reaffirm the fact that the subdued labor market and inflation nowhere near targets, will most likely lead to further rate cuts.
Key Points
- The RBA agreed "more likely than not" further policy easing would be appropriate.
- Labor market would be "particularly important" on whether further easing was appropriate.
- The RBA noted that lower interest rates were not the only policy option available on unemployment. 🤔
- They decided the June rate cut would help reduce spare capacity in the labor market.
- Data suggested spare capacity to remain in labor market for some time.
- Factors that were limiting inflation and wage growth are also expected to last for some time.
- Lower rates would push down the value of the AUD, while also reducing household debt repayments.
- The RBA was aware that lower rates hurt savers, but would stimulate the economy overall.
- They decided lower rates would not spur risky rise in borrowing, or inflation. 😂
- The persistence of subdued inflation threatened to un-anchor inflation expectations.
- The overall, national housing market remained weak, though auction clearance rates had picked up.
- Apra’s easing of bank lending rules would lead to modest increase in borrowing capacity.
- Escalation in Sino-US trade dispute intensified downside risks to global economy.
Best of probabilities to you.
Dane.
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