Robert Rennie, head of financial market strategy at Westpac, points out that the RBA minutes released Tuesday confirmed that the Board is still open to further monetary easing, although the prospects for a third consecutive easing in August have been dampened.
Key Quotes
“Employment data released Thursday revealed a soft update in an otherwise robust trend.”
“Employment rose by a smaller than expected 0.5k and the unemployment rate rose from 5.19% to 5.24%. While the underemployment rate fell 0.4% to 8.2%, it is important to highlight that, at 5.2%, the unemployment rate is well above the RBA’s 4.5% full employment target.”
“This then reinforces Westpac’s view that the RBA has further to go in terms of rate cuts if it has any chance of hitting the 4.5% NAIRU target any time soon. The RBA Governor may emphasise this point Thursday next week when he delivers his Anika Foundation speech on the topic of “Inflation Targeting and Economic Welfare”.”
“We remain of the view that the A$ should be capped above 0.70 and expect to see further weakness to 0.68 by the end of the year.”
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