In just over a hours time the Reserve Bank of Australia (RBA) will release the minutes of its May monetary policy meeting, an event that coincided with the bank cutting official interest rates to a record-low level of 1.75%.
While the RBA has since released its quarterly statement on monetary policy, making a raft of downgrades to its inflation forecasts that have fanned expectations for follow up rate cuts in the months ahead, that doesn’t mean that today’s minutes are not important, far from it, in fact.
Outside of the inflation outlook, there’s still plenty to focus on: the commentary surrounding the Australian dollar and outlook for the labour market, just to name two.
Here’s what Westpac’s senior currency strategist, Sean Callow, will be keeping an eye our for in today’s document.
The main focus will be the discussion on inflation, for any hint of just how worried the Board is about the impact of “very subdued growth in labour costs and very low cost pressures elsewhere in the world”. Some elaboration on the somewhat surprising language on the job market would also be of note: “Labour market indicators have been more mixed of late.” The 3 May statement had little to say on AUD, simply that “the lower exchange rate overall has helped the traded sector” and that an appreciation would “complicate” economic adjustment. Further detail on this would also be worth noting.
The minutes will be released at 11.30am AEST.
Given markets are now starting to bet on two rate cuts before the year is out, the minutes still carry the potential to be market moving given the outlook for interest rates.