RBA Monetary Policy Meeting Minutes & House Price Index Releases

Xe Corporate APAC

June 18, 20192 min read

The RBA Monetary Policy Meeting Minutes for their 4th June meeting have just been released. The RBA cut the Cash Rate by 0.25% to 1.25% at this meeting.

The pertinent points in the RBA minutes include:

• Board agreed “more likely than not” further policy easing would be appropriate
• Labour market would be “particularly important” on deciding further easing
• Noted lower interest rates not only policy option available on unemployment
• Judged June rate cut would help reduce spare capacity in the labour market
• Data suggested spare capacity to remain in labour market for some time
• Factors limiting inflation, wage growth also expected to last for some time
• Lower rates would push down value of AUD$, deuce household debt repayments
• Aware that lower rates hurt savers, but would stimulate economy overall
• Judged lower rates would not spur risky rise in borrowing, or inflation
• Persistence of subdues inflation threatened to un-anchor inflation expectations
• Housing market remained  weak, though auction clearance rates had picked up
• APRA easing of bank lending rules would lead to modest increase in borrowing capacity
• Escalation in Sino-US trade dispute intensified downside risk to global economy.

You can view the full release here - https://rba.gov.au/monetary-policy/rba-board-minutes/2019/2019-06-04.html

The Australia House Price Index (HPI) data for Q1 was also released. These came in worse than forecast:
• HPI (Q/Q)            -3.0%               Consensus -2.6%
• HPI (Y/Y)             -7.4%               Consensus -7.4%

The AUD is a little lower in immediate response.

Current indicative levels are:

AUD-USD                    0.6830 / 0.6855
AUD-EUR                     0.6080 / 0.6105
AUD-GBP                    0.5445 / 0.5470
AUD-JPY                        74.05 / 74.30
AUD-NZD                    1.0520 / 1.0545

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