Matthew Hassan, analyst at Westpac, suggests that the minutes of the June RBA Board meeting show the decision to cut the cash rate by 25bp at that meeting was driven by a revised assessment of spare capacity in the labour market and that the Board expects to ease policy further.
“We continue to expect a further 25bp rate cut in August and a final 25bp cut in November.”
“The minutes are clear on the prospect of further cuts, noting in the concluding paragraph that “… it was more likely than not that a further easing in monetary policy would be appropriate in the period ahead”. In the lexicon of RBA statements, “period ahead” signals that policy is ‘live’ in coming meetings but stops short of indicating an imminent move at the next meeting.”
“Overall, the minutes confirm more easing is on the way. Board members appear very much aligned to the Governor’s views, particularly around the labour market. That said, the ‘tone’ is not urgent in the sense that growth outlook still does not seem to be viewed as that challenging and low inflation is not a driving force behind the easing.”
“We continue to see the next 25bp rate cut coming in August and a final 25bp cut in November.”