RBA minutes keeps dovish tone

FXstreet.com (Barcelona) - Minutes of the monetary policy meetings of the Reserve Bank Board from last May, when rates were cut by an additional 0.25 bp to 2.75%, have been published. In summary, there was nothing new on the report that the market didn't know already, thus the first quarter CAPEX figures remain critical for the June policy meeting decision.

In the report, the RBA reminds us: "For some months the Board had considered that the inflation outlook provided scope to ease monetary policy further, should that be necessary to support demand. Members recognised that the effects of the earlier reductions in interest rates were still working through the economy..."

RBA added: "Nonetheless, growth was expected to be somewhat below trend for a while, and the inflation outlook had, if anything, been revised down slightly. Members were conscious of the strengthening conditions in the housing market, but also noted that, thus far, credit growth had remained subdued. Taking all the factors into consideration, the Board decided that some of the scope to ease policy should be used at this meeting. It judged that a further reduction in the cash rate was appropriate to encourage sustainable growth in the economy, consistent with achieving the inflation target."

Another interesting point was about conditions in the business sector, with the RBA stating "they had remained below average, possibly in part because the exchange rate had remained high despite lower export prices and interest rates."

According to Greg McKenna, CEO at GlobalFX and contributor at FXstreet.com, "no signs they are going to cut hard in the minutes just released..."