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According to David Plank, head of Australian economics at ANZ, RBA’s Board meeting minutes in March has the dominant theme of the tension between the activity and employment data.

Key Quotes

“This comes through in the discussion of international economic conditions, where the minutes note that:

Notwithstanding the slower growth in output, labour markets in the major advanced economies had remained tight and there had been ongoing signs of upward pressure on wages.”

“More importantly, this tension features in the discussion on the domestic economy and the final section on the Considerations for Monetary Policy.”

“The resolution of this tension will be central to the evolution of RBA policy. The  final paragraph of the Minutes suggest the RBA’s judgement about how this tension will be resolved is quite finely balanced. February’s comment that “Members would continue to assess the outlook carefully”, becomes “Members agreed to continue to assess the outlook carefully.”

“The RBA’s apparent open mindedness on the how the employment/GDP tension is resolved suggests a willingness to act quickly if the unemployment rate starts to move higher.”