Some thoughts from the Westpac analysts:
- The June meeting was the day prior to the release of the March quarter national accounts, which were considerably weaker than expected, particularly on household consumption and domestic demand
- The discussion of inflation suggests there is little risk of a change in the inflation outlook precluding a further move in interest rates.
- They said the recent slowdown in wages growth “would help contain inflation as the exchange rate depreciated”
- With the AUD currently sitting at 95c vs the USD 96.5c on the June 4 meeting day, it doesn’t appear to present an inflationary issue that would preclude or delay further policy moves from the RBA
- The minutes tended to downplay the relatively sanguine forward view presented by the ABS survey of private CAPEX expenditure plans
- Westpac concludes that the RBA stands ready to cut rates again
- They continue to favour an August 25bp rate cut, after updated Q2 CPI figures and Chinese GDP results
- Think also further 25bp cuts in Q4 of 2013 and Q1 (2014)
