The RBA held the official cash rate steady at its board meeting in March, as it had for every meeting since the cash rate was reduced to 1.50% in August 2016. Statements from RBA officials through 2018 had indicated the next move was “more likely to be an increase” until February of this year. Then, the RBA changed its tune and stated “the probabilities around these scenarios were now more evenly balanced than they had been over the preceding year…”
The release of any RBA meeting’s minutes is not expected to provide much excitement and only rarely does anything of interest emerge. Most of the time, the minutes are used to clarify statements made by RBA officials or to pinpoint the issues which the RBA has a current focus.
In this case, the minutes highlighted the RBA’s attention on the mismatch between recent weak or softening data reports and the labour market. As ANZ head of Australian Economics David Plank put it, “The dominant theme of the minutes of the RBA’s Board meeting in March is the tension between the activity and employment data.”
Locally, bond yields ignored small rises in bond yields offshore and, by the end of the day, had fallen noticeably. 3-year, 10-year and 20-year yields all shed 5bps to 1.45%, 1.99% and 2.39% respectively. However, in the cash futures market, prices barely changed and contracts continued to imply one rate cut by the end of August, with another cut in November viewed as a 44% chance.