Meeting Minutes Coming Up, Watch Rate Discussion Details

The RBA minutes from the February 6 meeting will be published today and given the retention of the tightening bias in the accompanying statement, they will be looked at closely for whether a 25bp hike was discussed and the tone of the discussion. With changes made to the format of the meeting statement and Statement on Monetary Policy, there could also be changes to the presentation of the minutes.

• If there wasn’t a discussion of whether further tightening was needed, then the impact of the tightening bias in the meeting statement, “a further increase in interest rates cannot be ruled out”, is likely to be diluted. Talk around a 25bp rate cut would offset the bias completely, but given the statement tone and Governor Bullock’s remarks we don’t expect that occurred.
• Also increased concern of possible downside risks to growth and sharper-than-expected weakening of the labour market would also be interpreted as dovish.
• Assuming there was a discussion of a rate hike, any indication that the Board did not see the risks as “balanced” as Bullock indicated in her press conference would be seen as hawkish. Signs that there remain concerns re upside risks to inflation, especially from domestic drivers, and the timing of achieving target could push out easing expectations.
• Also watch for any emphasis on achieving the mid-point of the band rather than the top.
• The publication of the breakdown of the meeting vote requires legislation and is not expected to occur before July 1.