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Bill Evans, analyst at Westpac, notes that the minutes of the May RBA Board meeting confirm that the Board holds a clear easing bias.

Key Quotes

“This is spelt out when the technical assumption that the cash rate followed the path implied by market pricing is used in the forecast.”

“As the minutes note “financial market pricing implied that the cash rate was expected to be lowered by 25bps within the next three months and again by the end of 2019″.”

“The Board notes that “without an easing in monetary policy over the next six months, growth and inflation outcomes would be expected to be less favourable than the central scenario”.”

“On February 21, Westpac forecast that the RBA would cut the cash rate in two 25bps tranches in August and November. These forecasts have not changed since then. Subsequently, markets and most forecasters have moved largely towards the Westpac view of two cuts. Indeed, we are pleased that markets now fully pricing in 50bps of cuts by November.”