RBA April Minutes: An ‘on balance’ pause; May live – ANZ

Analysts at Australia and New Zealand Banking Group (ANZ) offer their afterthoughts on the Minutes of the Reserve Bank of Australia’s (RBA) April policy meeting.

Key quotes

“The two key pieces of information for us in the Minutes of the RBA’s April Board meeting are:

• The Board appears to have spent some time considering the case for a rate hike  –  reflected in the length of that discussion in the Minutes. On the decision itself, it notes that:

Members recognized the strength of both sets of arguments, but, on balance, agreed that there was a stronger case to pause at this meeting and reassess the need for further tightening at future meetings.

• On the length of any such pause the word ‘month’ as opposed to ‘months’ is worthy of note. Specifically, it states:

Over the coming month, members observed that they would receive another quarterly reading on inflation, additional monthly readings on the labor market, household spending and business conditions, and further information on developments in the global economy and financial markets.”

“The staff were also due to present a full set of updated forecasts at the following meeting.

The above suggests to us that the decision to pause was a relatively close one –with a case able to be made for both an increase in interest rates and a pause.

It further suggests that the May meeting is live – with the Board in a position to be persuaded either way based on the balance of the data and the updated  set of forecasts they will receive at that meeting (and which will be published in the Statement on Monetary Policy a few days later).”