The RBA left the official cash rate target unchanged at its August board meeting, keeping it at 1.00%.
Around February of this year, the RBA began to publicly move away from having a tightening bias. The reference to a higher rate as “more likely” than a lower rate was removed and the phrase “the probabilities around these scenarios were now more evenly balanced than they had been over the preceding year” was introduced.
Two months later, the RBA’s attitude was not inclined to make a change in either direction as “there was not a strong case for a near-term adjustment in monetary policy.”
In May, the transformation to an easing bias had taken place. If “there was no further improvement in the labour market in the period ahead….a decrease in the cash rate would likely be appropriate.” A 25bps rate cut was announced in June and another one followed in July. No change was made at the RBA’s August board meeting.
The minutes of that meeting have now been released and apparently the board’s deliberations focussed on “developments in the global and domestic economies…” Despite noting “global growth had remained reasonable” the board expected “downside risks to the global growth outlook” as a result of an escalation in the trade war between the US and China. As such, another cut in the cash rate would be considered “if the accumulation of additional evidence suggests this was needed…”