“The bank's central scenario for the economy is that condition for rate hikes will not be met before 2024,” the Reserve Bank of Australia (RBA) July meeting’s minutes revealed on Tuesday.
Additional takeaways
Board remains committed to maintaining highly supportive monetary conditions.
Recovery in the labour market had continued to be faster than expected.
Will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range.
The bank's central scenario for the economy is that condition for rate hikes will not be met before 2024.
Meeting rate hike conditions will require labour market to be tight enough to generate "materially higher" wages growth.
Outcomes for the nominal side of the economy had not been as positive.
In light of economic improvements and the agreed decision-making framework, members decided to adjust weekly bond purchases from $5 billion to $4 billion.
The bond purchase program had been one of the factors underpinning the accommodative conditions necessary for economic recovery from the pandemic.
Given the high degree of uncertainty about the economic outlook, members agreed that there should be flexibility to increase or reduce weekly bond purchases in the future.
Importance of monitoring trends in housing borrowing and ensuring that lending standards are maintained.
While a pick-up in inflation and wages growth was expected, it was likely to be only gradual and modest.
Year-ended cpi inflation was expected to rise to be temporarily above the target in the June quarter, but would subsequently decline.
Market reaction
AUD/USD is little changed on the RBA Minutes release, as it continues to trade modestly flat at 0.7339. The aussie meanders near eight-month lows of 0.7322 as Australia’s Victoria state lockdown is likely to be extended for seven days until July 27.
