Morning Brief – RBA Minutes show pausing narrative

The Australian US dollar failed to react to the RBA meeting minutes, which revealed that members of the Australian Reserve Bank agreed to reconsider the case for a pause at the upcoming April policy meeting.

Note that the March meeting was held before the current bout of bank weakness and the case for raising rates at all is likely to be significantly diminished by most global central banks.

Yesterday Christopher Kent, Reserve Bank of Australia Assistant Governor (Financial Markets) said that lags in policy transmission meant the full impact of RBA rate hikes so far are yet to be felt.

Other highlights of the Minutes from the RBA came as they revealed that “Restrictive policy and uncertain outlook meant appropriate at some stage to hold rates steady.”

They Minutes also revealed that the board thought that “Pausing would allow time to reassess the outlook for the economy” and “Board felt it prudent not to place too much weight on one period’s data”.

On inflation, they said that “Further tightening of monetary policy likely required to bring inflation down” and “Inflation too high, labour market tight and business surveys solid”.

In other news surrounding Australia, the weekly consumer confidence number fell to 76.5. The survey includes a question about consumers’ inflation expectations.

The inflation expectation rose 0.2% to 5.9% during these weeks survey, this marked highest since the middle of December 2022 for this survey.

Also there was some market moving news from the United States during the early Asian session. The US Treasury is examining unlimited deposit guarantees (via the FDIC) if the bank crisis worsens.

The Treasury said that US bank deposits are around US$18 trillion would be upheld, and the FDIC insurance fund is around US$125 billion. Note that the FDIC insurance fund is unfunded.