The RBA held the official cash rate steady at its board meeting in November, as it had for every meeting since the cash rate was reduced to 1.50% in August 2016. Statements from RBA officials in the last two years indicate the next move is likely to be up but, at the same time, those statements do not hint at the timing of any such move. Minutes of the November meeting indicate there is little reason to expect any change soon.
Expectations prior to the document’s release were minimal. Rate changes are not expected until mid-to-late 2019 at the earliest and minutes of previous meetings have repeatedly stated a lack of “strong case for a near-term adjustment in monetary policy”. However, economists and other observers view RBA board meetings as a chance for the RBA to signal changes in the path of the overnight cash rate.
While the minutes did not provide any surprises, they did indicate the RBA is confident of its forecasts for employment, GDP growth and inflation. There has been a marked difference between the RBA’s forecasts and those of private sector economists in recent times; the RBA’s forecasts have generally been more optimistic than the forecasts from economists from local banks and other financial institutions. To date, both sides have stuck to their respective positions and neither side appears to be budging.