Communication from the RBA today all but confirms that the Board is in wait and see mode in the near term.
A cash rate change in June appears highly unlikely. The Board will be hoping for more clarity on the Middle East conflict by the 11 August Board meeting.
A bit restrictive
Today’s Board meeting Minutes reiterated - with the usual caveats - that the Board assesses the cash rate and broader financial conditions as now being “somewhat” restrictive.
“Having decided by majority to raise the cash rate target by 25 basis points, members considered what their deliberations implied for upcoming decisions. Members judged that, while it was still uncertain, financial conditions would probably be somewhat restrictive after this decision. They therefore agreed that the decision would give the Board space to see how the conflict in the Middle East develops and Australian households and businesses respond. They also agreed that any assessment of how the incoming data could change the outlook should acknowledge that monetary policy could not alter the near-term trajectory of inflation and, additionally, that output growth would likely be lower than potential growth for some time.”
