RBA July meeting minutes – says there was a strong case for raising the cash rate

Reserve Bank of Australia

  • Board considered holding rates steady or hiking by 25 bps
  • Strong case for
    both, but board judged arguments for holding steady were stronger
  • Board agreed some
    further tightening may be required, would reconsider at August
  • Current stance of
    monetary policy was “clearly restrictive”, and would become
    more so
  • Board discussed
    risks economy, consumption could slow more than expected
  • Noted squeeze on
    household finances, risk unemployment could rise more than needed
  • Board noted inverted
    yield curve pointed to tighter conditions, slowing growth
  • Also risks with
    waiting too long for inflation to return to target
  • Inflation proving
    sticky in other countries, Australian rates still lower than many
  • Labour market very
    tight, weak productivity adding to labour costs
  • While domestic
    inflation had eased, service inflation still high along with rents,
    energy, food
  • Annual wage growth
    seen rising to 4% in q3, following fair work award
  • Economy had slowed
    considerably, q2 GDP growth seen around +0.2% q/q
  • Consumer spending
    seen weak in q2, rebound in housing market to support consumption

Bolding above is mine. The August 1 RBA meeting is live.

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AUD/USD had a pop on the lead up to and after the release:

This article was written by Eamonn Sheridan at www.forexlive.com. Source