VIEW: NAB: Minutes Show RBA Is Looking For An Opportunity To Pause

NAB note that “the RBA Minutes for March suggest the Board is evaluating the case for pausing, but consistent with other recent communication, “members observed that further tightening of monetary policy would likely be required to ensure that inflation returns to target.” The Minutes say that “Members agreed to reconsider the case for a pause at the following meeting.” That echoes Governor Lowe’s comments that he had an ‘open mind’ about April, with the Minutes also highlighting employment, inflation, retail trade and business surveys as key to the April decision.”

• “The Minutes place a lot of emphasis on the data flow which of course pre-date global developments. This adds an extra layer of uncertainty and Assistant Governor Kent yesterday said the RBA would of course take this into account and the RBA is speaking with their global peers – what the US Fed does on Wednesday will be an important input into the RBA’s decision in April. NAB’s view is that the data flow to date makes the case for a 25bp increase in April and May (business conditions and prices in the NAB Survey were strong, and employment rebounded) before then pausing to assess developments. The risk is the RBA may decide to pause earlier.”