RBA Minutes contain no surprises

The minutes of the June RBA board meeting were released last week and showed that the RBA continues to be worried about Sydney house prices, a strong $A and a labour market that is picking up too slowly. While there was no explicit easing bias, governor Glenn Stevens made it clear that the bank was prepared to cut rates further if conditions warranted. The dilemma for the governor is that lowering cash rates no longer has the stimulus impact it had when rates were higher and the last time the RBA cut rates, the $A actually rallied. Westpac economics believes the RBA will stay on hold for the rest of 2015 and 2016 with the RBA adopting a more explicit easing bias in the months ahead.