RBA Minutes offered little new details for markets - TDS

In view of analysts at TDS, RBA minutes for the May meeting offered little new details for markets while the bank is generally upbeat on the global economy.

Key Quotes

“The RBA is generally upbeat on the global economy, says forward looking labour market indicators are positive, its outlook for inflation to trend higher has strengthened following the most recent CPI print, but it will take some time for the RBA to assess the impact of recent macro-prudential policies on the economy.”

“Overall, the RBA has a high hurdle to cut rates, but should labour conditions worsen, unemployment edge up and/or if housing risks ease, the market is likely to price in higher odds of a RBA cut given the RBA noted “The Board continued to judge that developments in the labour and housing markets warranted careful monitoring”. On Global developments, it is clear the RBA is a lot more optimistic than the RBNZ.”

“Looking ahead, we have Q1 wage cost index being released tomorrow where TD and the market does not expect a pickup in wage growth, remaining near record lows at 1.9%/yr.”

“On a separate note, Fitch sees Australia’s sovereign rating sitting “quite well” in the AAA category, according to Fitch ratings analyst Mervyn Tang during a conference in Sydney. Fitch sees the revenue measures in the recent budget translating into smaller deficits in the medium term.”