MNI RBA Review - March 2022: Some Tweaks, But Patience Remains At The Core

EXECUTIVE SUMMARY

• The RBA left its policy settings unchanged at the end of its March meeting, in line with unanimous expectations, with the cash rate target held at the record low level of 0.10%.
• The Bank tipped its hat to the risks posed by the Russia-Ukraine conflict, deeming the event to be “a major new source of uncertainty,” while noting that the situation has forced commodity prices even higher. At home, the Bank pointed to the economic resilience of the Australian economy, flagging labour market developments as a key barometer on that front.
• Note that RBA Governor Lowe added references to broader measures of labour costs to the statement. While these references are new to the post-meeting statement, they are not new to RBA speak. February saw Lowe reference the need to monitor a wider suite of compensatory measures given the varying nature of remuneration in tight labour markets. This could give the RBA a little more wiggle room when it comes to rate lift off, with the growth of wage metrics inclusive of additional sources of compensation outstripping headline wage growth at present.
• August remains the obvious lift off point, as the Bank will have the two further CPI prints (that Lowe recently flagged when question on lift off timing) in hand.
• Click to view full review: MNI RBA Review - March 2022.pdf