In Australia, on Tuesday the central bank will release the minutes of its latest meeting while on Thursday, jobs data will be published. The NAB FX Strategy Team, the minutes will likely show uncertainty/data-dependence of the RBA has increased.
“The RBA continues to emphasise the importance of the labour market figures, particularly the unemployment rate. NAB expects the unemployment rate to tick up from 4.9% in February to 5.0% in March (mkt: 5.0%), with solid employment growth of 25k (mkt: 15k). The NAB Quarterly Business Survey is also released on Thursday.”
“RBA Deputy Governor Debelle’s recent speech on “The State of the Economy” suggests the Bank is still struggling to reconcile a strong labour market with weak activity, where the business surveys are somewhere in between. At this stage, the RBA is waiting to see how this tension is resolved as this will “play a critical role in
whether [the RBA will]continue to make satisfactory progress in achieving the goals of full employment and the inflation target”. In this context, we expect that the board minutes will still state that, “members agreed that there was not a strong case for a near-term adjustment in monetary policy”, notwithstanding a much worse-than-expected outcome for Q4 GDP growth.”
“We think that the minutes could indicate the increased uncertainty/datadependence of the RBA that was captured in the tweak to the April interest rate decision, which said, “The Board will continue to monitor developments and set monetary policy to support sustainable growth in the economy and achieve the inflation target over time.”
“The March unemployment rate is released on Thursday. NAB expects the unemployment rate to be marginally higher, increasing from 4.9% to 5.0%. Lower surveyed capacity utilisation and falling job ads point to the risk of higher unemployment, but this has been the case for some time. We expect decent employment growth of 25k after last month’s weak print of 5k. Such an outcome would be broadly consistent with the circa 20k per month growth suggested by the NAB Survey employment index.”