Australian Dollar tumbles sharply in Asian session after dovish RBA minutes set out the conditions for a rate cut. It’s seen as another step towards more monetary easing ahead, as markets are expecting two cuts this year.
The most important part of the minutes is that RBA confirmed there could be a need for rate cut. It said “a lower level of interest rates could still be expected to support the economy through a depreciation of the exchange rate and via reducing required interest payments on borrowing, freeing up cash for other expenditure”. Also, in a scenario where ” inflation did not move any higher and unemployment trended up”, “a decrease in the cash rate would likely be appropriate in these circumstances”.”
Nevertheless, “members agreed that there was not a strong case for a near-term adjustment in monetary policy”. It suggested RBA would wait-and-see, likely at least through Q2.
Suggested readings on RBA.
- (RBA) Minutes of the Monetary Policy Meeting of the Reserve Bank Board
- RBA Minutes – Confirming Dovish Monetary Policy Stance. Low Inflation Raises the Chance of Rate Cut
- RBA Board Minutes Set Out the Conditions for a Rate Cut
