Reserve Bank of Australia meeting minutes from July, when rates were left unchanged

  • Repeats rising AUD would complicate economic rebalancing
  • Watching data on inflation, employment and housing to refine outlook for economy
  • "To make any adjustment to the stance of policy that may be appropriate" depending on data
  • RBA Board also awaiting updated staff forecasts for August review
  • Data suggested Australian economy grew at moderate pace in Q2, net exports less of a boost
  • Inflation expected to remain quite low for some time given subdued wages, cost pressures
  • Measures of inflation expectations remained below average
  • Liaison suggested retail sales picked up in June, but price discounting continuing
  • Recent labour data more mixed, leading indicators still pointed to jobs growth
  • Transition of economic activity to non-resources sector "well advanced"
  • Liaison pointed to growth in non-mining business investment
  • RBA judged uncertainty caused by Brexit to have only a modest impact on global growth

I've bolded the comments above related to the bank awaiting more data. They always are, but I reckon the fact they highlighted "awaiting updated staff forecasts for August review" further emphasises that August is very much a 'live' meeting.

AUD has taken another leg lower on enhanced expectations of a rate cut.

-

The inflation data from Australia on July 27 takes on even more significance in light of these minutes. We were always going to be watching this report for Q2 inflation but now the RBA has emphasised even more how important this report is. Further soft inflation will pretty much guarantee a cut in August (the meeting is August 2) ... but something that we'll have watch out for with the inflation report is that if inflation is showing signs of moving back higher the upmove in the AUD could be fierce.

July 27 is still a, long way off (in market terms, next week is an eternity away!).

-

I'm going to add a bit more ... I really think these comments from the minutes are very significant. I am picturing Glenn Stevens staring at the Bloomberg terminal (and updated staff forecast papers) awaiting the info while muttering "Go ahead, make my day ..."