The Minutes from this month’s RBA board meeting are out and even though the Governor’s statement dropped any clear easing bias, it is clear the board is leaving the door ajar to further easing.
The final paragraph of the minutes highlighted what many said at the time of this month’s easing. That is, the RBA didn’t give any guidance after the February easing. Which implied the markets take, and the Aussie dollar’s rally, after this month’s cut was erroneous.
Here what the minutes said:
On balance, taking all these factors into account, the Board decided that the best course was to ease monetary policy further at this meeting. Members agreed that, as at the time of the reduction in the cash rate in February, the statement communicating the decision would not contain any guidance on the future path of monetary policy. Members did not see this as limiting the Board’s scope for any action that might be appropriate at future meetings.
Aussie dollar traders have noticed the easing bias as well. It’s fallen 20 points so far but looks like it might come under further pressure once Europe enters later today.
At least the RBA will be pleased given the minutes said:
Members also noted that further depreciation of the exchange rate seemed to be both likely and necessary, particularly given the significant declines in key commodity prices, and that such an outcome would help to achieve more balanced growth in the economy and assist with the transition to a lower terms of trade.
The RBA is doing a solid job managing the economy, rates and the exchange rate at a difficult period in markets and a difficult period for the Australian economy.