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- Tuesday will bring the release of the minutes from the RBA's June meeting. The
IB strip is currently pricing a first full 25bp hike for Nov '19.
- WHAT CHANGED?: Introduction of risks around Italian politics and a few EM
economies. Removed language around the "reduction in spare capacity in the
economy." The Bank also added that "while there may be some further tightening
of lending standards, the average mortgage interest rate on outstanding loans is
continuing to decline."
- WHAT DIDN'T?: The RBA's econ. view, incl. its subdued outlook for wages.
- SINCE THEN: An impressive Q1 GDP release makes the RBA's GDP exp. more
achievable. In a subsequent address Gov Lowe noted that a higher rate of wage
growth is needed in order for inflation to hit the midpoint of the Bank's tgt.
May's labour mkt report showed that the underemployment remains elevated.
- WHAT NEXT?: Lowe has noted that the next move in rates is likely up, but given
the trend in wages and inflation there is no need for higher rates anytime soon.
The lack of pressure from markets over pricing a rate hike will suit the RBA.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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