Very Light Pressure In Wake Of RBA

YM -1.5, XM +1.0. A more upbeat economic assessment from the RBA (better short-term GDP outlook, lower unemployment track and uptick in underlying inflation expectations) did little for the space, outside of applying some mild pressure, as the movement in the Bank's forecasts was more of a mark to market exercise given the recent dynamics in the local economy. The assessment came alongside the Bank leaving its broader monetary policy settings unchanged, as expected.

• The Bank revealed that "at its July meeting, the Board will consider whether to retain the April 2024 bond as the target bond for the 3-year yield target or to shift to the next maturity, the November 2024 bond. The Board is not considering a change to the target of 10 basis points." The Bank also stressed that "the Board is prepared to undertake further bond purchases to assist with progress towards the goals of full employment and inflation. The Board places a high priority on a return to full employment." The highlight of its priority in the final sentence of that passage is a new inclusion to the statement but isn't particularly shocking.
• The Bank concluded with "the Board is committed to maintaining highly supportive monetary conditions to support a return to full employment in Australia and inflation consistent with the target. It will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, the labour market will need to be tight enough to generate wages growth that is materially higher than it is currently. This is unlikely to be until 2024 at the earliest." The final sentence previously read "the Board does not expect these conditions to be met until 2024 at the earliest." This tweak was likely a product of the aforementioned updated projections surrounding inflation and unemployment.
• A narrower than expected Australian trade surplus reading (which saw an unexpected fall in exports in M/M terms) and a firm round of housing finance data did little to drive activity ahead of today's central bank decision.