RBA Minutes: Limited new information and no surprises – RBC CM

There were no surprises and only limited new information in today's RBA minutes as the RBA's generally positive global and domestic assessment remains largely unchanged leaving it comfortable with its base case view for a return to trend growth, reduced excess capacity in the labour market, and firmer wages and inflation over the medium-term, explains the analysis team at RBC Capital Markets.

Key Quotes

“It remains mindful of risks with notable discussion around AU household indebtedness and Chinese financial risks at last week’s FSR. The challenges to household consumption from "slow growth in real wages" were repeated.  Our economists argue that the key domestic data since the Oct board meeting - another very weak retail sales print for August and July - suggest that the RBA may be underestimating some of these risks. Also noteworthy was the feedback from a "number of firms" from the RBA's business liaison program that they were "largely absorbing increases in energy costs into margins rather than passing them through to final prices" suggesting Q3 headline CPI (due 25 Oct) may not jump by as much.  Key for policy deliberations in the near term will be the upcoming Q3 CPI and Q3 Wage Price Index (16 Nov).  We are long AUD/CAD in our trade of the week.”