RBA Minutes Give Justification For Rate Cut

Australia Monetary Policy Meeting Minutes

Release Explanation: Changes in rates affect interest rates in consumer loans, mortgages, and bond rates. Since short term interest rates essentially reflect the return on holding a currency, rate decisions usually affect the exchange rate of the Australian Dollar. Increases in rates or even expectations for increases tend to cause the Australian Dollar to appreciate, while rate decreases cause the currency to depreciate. This is a detailed record of the recent interest rate meeting. This release is very important for traders to discern the RBA's stance on monetary policy and hints of future rate shifts.

Trade Desk Thoughts: The following reasons were given for the RBA's decision to lower interest rates by 100 basis points.

The slowing in domestic demand to date has been led by household spending

• The volume of retail sales increased only slightly in the September quarter
• Motor vehicle sales continues to decline
• Consumer sentiment remains low
• Housing loan approvals has picked up very little
• Business conditions continue to soften.
• The trend in employment growth is slowing.
• Domestic spending will be weaker than expected
• Members noted that economic conditions in other countries continue softening
• Housing finance and loan approvals have slowed during the past few months

Forex Technical Reaction: The Aussie moved very little in response to the release of the RBA minutes. The pair has traded in a 50 pip range since the start of the Asian session, but is holding below the 0.6700 level.

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