According to Bill Evans, analyst at Westpac, the RBA Board has singled out the February Board meeting as important for a reassessment of the economic outlook.
Key Quotes
“The minutes of the December monetary policy meeting of the Reserve Bank Board have made it clear that the Board will be reassessing the economic outlook next February. Whilst it seems reasonable at the end of the year to note that a review will occur at the beginning of the next year, this has not been specifically noted in December minutes in previous years.”
“Further evidence of the importance of this signal is that the minutes note “economic growth and the unemployment rate remain broadly consistent with the forecasts, but members agreed that it will be concerning if there were a deterioration in the outlook”.”
“These two observations from the minutes strongly point to the unusual importance of the data flow over the next two months.”
“Conclusion
These minutes strengthen our conviction that the Board would be comfortable easing rates further at the February meeting. The flow of economic data over the next six weeks will be critical to that decision, particularly the labour market ; retail sales and confidence.
Given our forecasts, Westpac is comfortable with our current view that the RBA will reduce the cash rate from 0.75% to 0.50% at the February Board meeting.”
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