RBA Monetary Policy Meeting Minutes & House Price Index Releases

Xe Corporate APAC

June 18, 2019 2 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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