VIEW: Westpac write "the minutes of the May.....>

RBA: VIEW: Westpac write "the minutes of the May meeting confirm that the RBA

holds a clear easing bias. This is spelt out when the technical assumption that

the cash rate followed the path implied by mkt pricing is used in the forecast.

The Board notes that "without an easing in MonPol over the next 6 months, growth

& inflation outcomes would be exp. to be less favourable than the central

scenario". Recall that, the detailed forecasts which were printed in the SoMP on

May 10 highlighted GDP forecast growth at 2.6% & underlying inflation growth at

1.75% in '19, lifting to 2.75% & 2% in '20. These are barely acceptable

forecasts with the '19 forecasts being below trend for growth & below the bottom

of the 2-3% target band for underlying inflation. So the issue really becomes

one of the profile for lower rates. Here, the minutes give considerable emphasis

to the labour mkt. The Board points out that international experience suggests

that inflation had remained low despite historically low rates of unemployment.

It also notes that there is spare capacity in the AU labour mkt which would

remain for some time. Consequently, there is ample scope for policy to drive

down the unemployment rate without overshooting the RBA's inflation target."