RBA considered postponing rate cut – Westpac

By FXStreet Research Team at Westpac, suggests that the RBA minutes earlier in the week were less dovish than expected.

Key Quotes

“The key new insight was in the “Considerations” paragraph: “members discussed the merits of adjusting policy at this meeting or awaiting further information before acting.” This lack of urgency cast doubt on an imminent follow-up move so markets reduced pricing for a June cut from over 25% to under 15%. Westpac and most other forecasters expect a cut at the August meeting however, after the July 27 CPI update.

Moreover, with the midpoint of the RBA’s forecasts for CPI remaining at the bottom end of their 2-3% target range over the next few years, risks to our forecast of one further rate cut in August are skewed to the downside i.e. a cash rate below 1.50%. Elsewhere in the minutes, the focus on inflation was re-emphasized, and wage inflation data on Tuesday accordingly became unusually relevant for markets. The wage price index softened to 0.4% q/q, 2.1% y/y, the slowest pace of growth since the beginning of the series in 1997 and thus most likely the lowest in more than 50 years.”
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Source:: FX Street