RBA June Monetary Policy Board Minutes: Further Easing Likely in Near Future

The Reserve Bank of Australia (RBA) minutes released at 01:30 GMT showed policymakers are leaning toward further monetary policy easing in the near future. Prices continued to retreat for a seventh session shortly after the news was released, suggesting investors are pricing in a rate cut for July.

In the minutes, the RBA pointed out once again that labor market developments are “particularly important” on deciding further easing. We saw this last week following the release of a disappointing Unemployment Rate. It came in at 5.2%, above the 5.1% forecast. Traders have been aggressively selling the currency since this report was released on June 12.

The following are some of the highlights from the RBA minutes of its June 4 monetary policy meeting, courtesy of Reuters.

• The RBA Board agreed “more likely than not” further easing would be appropriate.
• Labor market would be “particularly important” on deciding further easing.
• The RBA Board noted lower interest rates not only policy option available on unemployment.
• Board members judged the June rate cut would help reduce spare capacity in the labor market.
• Data suggested spare capacity to remain in labor market for some time.
• Factors limiting inflation, wage growth also expected to last for some time.
• Lower rates would push down value of Australian Dollar, reduce household debt repayments.
• The RBA Board is well aware that lower rates hurt savers, but would stimulate the economy overall.
• The RBA Board also judged lower rates would not spur a risky rise in borrowing, or inflation.
• The RBA Board also felt that the persistence of subdued inflation threatened to un-anchor inflation expectations.
• Additionally, the RBA also said the housing market remained weak, though auction clearance rates had picked up.
• The RBA also said APRA easing of bank lending rules would lead to a modest increase in borrowing capacity.
• Finally, the RBA said the escalation in the Sino-US trade dispute intensified downside risks to the global economy.

At 02:11 GMT, the AUD/USD is at .6845, down 0.0007 or -0.10%.