RBA Minutes: Board agreed further rate cuts warranted over time

The Reserve Bank of Australia (RBA) published the Minutes of its July monetary policy meeting on Tuesday, highlighting that the board agreed further rate cuts warranted over time and focus was on timing and extent of easing.

Additional takeaways

• Board considered whether to leave rates at 3.85% or to cut by 25bps.

• Majority agreed prudent to await confirmation on inflation slowdown before easing,

• Majority felt cutting rates three times in four meetings would not be "Cautious and gradual.”

• Case for no change cited some data, including on inflation, had been little firmer than expected.

• Job market had also not loosened as expected, less risk of severe global downturn.

• Members agreed monetary policy was modestly restrictive, though financial conditions had eased.

• Difficult to know how far rates can fall before policy no longer restrictive, so prudence needed.

• Minority for rate cut put more weight on downside risks to economic outlook, inflation.

• Case for cut cited evidence inflation was on track to mid-point of target band, if not lower.

• US Tariffs would be drag on world growth and thus Australia, where GDP already subdued.

• Unsure whether market sector employment would pick up as non-market sector slowed.

• Outlook for global economy highly uncertain, US trade policy unpredictable.

Market reaction to the RBA Meeting Minutes 

At the time of writing, AUD/USD is trading 0.08% lower on the day to trade at 0.6519.