RBA Minutes: Risks on inflation are asymmetric - TDS

According to analysts at TD Securities, while the RBA's forecasts in the June statement are the same as those in the May statement (GDP 2.75% over 2019/20, inflation 1.75% over 2019, unemployment around 5% in 19/20), today's minutes suggest the risks on inflation are asymmetric and skewed to the downside.

Key Quotes

“While the RBA indicates "Members recognised that Australia's flexible inflation targeting framework did not require inflation to be within the target range at all times" (i.e. not locking itself into cutting), it does appear as though a sub 1% cash rate is looking more likely after Luci Ellis' speech last week, indicating NAIRU is 4.5%, not 5.5% as previously assumed.”

“Head of Financial Stability at the RBA, Jonathan Kearns delivered a speech to a property summit in Canberra. He highlighted that although mortgage arrears have climbed back to 2010 levels, arrears are well below the early 1990 recession levels and below other developed nations. Arrears 'could continue to edge higher for a bit longer', but were not seen as posing a risk to the financial system assuming strong lending standards and unemployment remains low.”