Little Changed After The RBA Minutes Release

ACGBs (YM -1.0 & XM -2.0) are little changed after the release of the RBA Minutes for the February meeting. To summarise:

• RBA members acknowledged progress towards the Board’s objectives but stressed the need for more.
• Australian inflation decreased but remained above target due to softer goods prices offset by high services inflation.
• Consumption growth stayed subdued, affected by high inflation and increased taxes.
• GDP growth remained modest but demand exceeded supply potential, leading to inflationary pressures.
• Uncertainties included persistent inflation, sluggish productivity, and potential consumption weakness.
• The discussion on raising the cash rate targeted slowing demand growth to meet inflation targets gradually.
• However, considering moderated inflation and weaker economic data, the decision to maintain the cash rate prevailed, aligning with the goals of price stability and full employment.
• The statement emphasised monitoring economic trends and inflation closely while keeping policy flexible to meet targets effectively.
• Cash ACGBs are slightly cheaper after the release and 1-2bps cheaper on the day. The AU-US 10-year yield differential is at -12bps.
• Swap rates are flat to 1bp higher after the release and 1-2bps higher on the day.
• The bills strip is slightly cheaper on the day, with pricing flat to -1.
• RBA-dated OIS pricing is little changed after the release. A cumulative 36bps of easing is priced by year-end.