RBA Minutes stick to the Script

The Australian Dollar was steady, this morning, after the Reserve Bank of Australia (RBA) released their minutes from their May 2 monetary policy meeting.

The minutes contained nothing that surprised the financial or Forex markets. The RBA minutes were consistent with previous RBA statements.

On May 2, the central bank left the Official Cash Rate at its 1.5 percent record low, as expected. The minutes said that steady rates were “consistent” with sustainable growth and hitting the central bank’s inflation target. The minutes also said that both the labor and housing warranted “careful monitoring.”

The next big official release out of Australia is the official labor market data for April. This data release will be closely watched on Thursday. The employment rate is expected to remain steady at 5.9%.

In other data, housing numbers have been rather sketchy and the central bank is concerned. Future data will be closely watched here as well.

The minutes showed that policy makers were concerned that low wage growth and strong competition were dampening inflation. It also said that a stronger than expected Australian Dollar would “complicate” the country’s adjustment away from mining-sector reliance. No change in language here. The minutes noted that the outlook for China’s economy was a source of uncertainty.

Australian Dollar shrugs off the RBA Minutes

The language indicates that the central bank will remain in a neutral wait and see mode towards monetary policy. This means that there is little chance for a change with the official cash rate this year or into 2018. The RBA’s focus on household debt levels leaves the financial markets with the distinct impression that the bank is unlikely to lower interest rates anytime soon.

After the news, the Australian dollar ticked higher only to move back lower into a range trade around 0.7430 against the US Dollar.