RBA Minutes: Further rate cuts likely needed in coming year

The Reserve Bank of Australia (RBA) published the Minutes of its August monetary policy meeting on Tuesday, which showed that board members agreed that some further reduction in the cash rate is likely to be needed in the coming year. 

Additional takeaways

The RBA board saw a strong case for a 25bps cut in the cash rate.
The board judged some further reduction in the cash rate likely needed over the coming year.
The stance of policy was still considered somewhat restrictive.
The pace of rate cuts would be determined by incoming data and the balance of global risks.
The board saw arguments for both a gradual pace of easing and for a faster pace.
The labour market remained a little tight, inflation was still above midpoint, and domestic demand was recovering.
Uncertainty about spare capacity and the neutral rate also argued for gradual easing.
Faster easing might be needed if the labour market is already in balance, risking inflation undershooting the midpoint.
The balance of risks could shift to the downside on adverse developments in the global economy.
The board agreed it was not yet possible to judge between scenarios and would be guided by data.
Latest staff forecasts were consistent with meeting full employment and inflation targets.
The board judged house price increases to be within the bounds of past easing cycles, with home building picking up.
Risks from U.S. tariff policy remained significant, though the worst outcomes seemed to have been avoided.
The board considered whether to run down government bond holdings at a faster pace but decided it was not needed.
Bonds would continue to be run down as they mature, with a faster pace no longer under consideration.

Market reaction

At the time of press, the AUD/USD pair was up 0.07% on the day at 0.6477.