The minutes for October RBA meeting were clearly dovish. There, the central bank cut benchmark interest rate by -25bps to new historical low of 0.75%. Most importantly, RBA said, , “the Board would continue to monitor developments, including in the labour market, and was prepared to ease monetary policy further, if needed.”
Yet, the minutes revealed detailed arguments in favor of keeping the policy rate unchanged. But in the end, these factors ” did not outweigh the case for a further easing” at the meeting. Lower rates would help “reduce spare capacity”, and provide “greater confidence” that inflation would meet target. Additionally, RBA noted “the trend to lower interest rates globally”, and the effect on the economy and inflation outcomes.
Overall, another rate cut is still likely subject to the developments in employment and inflation. But the minutes suggested that RBA is more likely to stand pat for the rest of the year, for the effect of this year’s three rate cuts to play out.
Suggested readings:
- RBA Minutes – Sending Dovish Message by Rebuking Arguments in Favor of Keeping Rates Unchanged
- RBA Minutes Make Strong Case for Lower Rates but Timing Still likely to be February for the Next Cut
AUD/JPY stays in tight range after the release. Current development suggests that corrective pull back form 74.49 has completed at 71.73. Rebound form 69.95 is still in progress and could resume soon. Break of 74.49 resistance will confirm this bullish view and target 100% projection of 69.96 to 74.49 from 71.73 at 76.27.
