RBA Minutes: Discussed the options of reducing the targets for the cash rate and the 3-year yield towards zero, without going negative

The October Reserve Bank of Australia meeting minutes have provided some additional colour on the Board’s view of risks to the economy and the outlook for policy.

The statements are trickling through

• RESERVE BANK OF AUSTRALIA MINUTES: BOARD AGREED TO MAINTAIN HIGHLY ACCOMMODATIVE POLICY SETTINGS AS LONG AS REQUIRED
• 19-Oct-2020 18:30:24 - RBA MINUTES: MEMBERS OBSERVED THAT THE GLOBAL ECONOMY WAS GRADUALLY RECOVERING
• 19-Oct-2020 18:30:33 - RBA MINUTES: TE CONTINUATION OF THE RECOVERY WAS DEPENDENT ON CONTAINMENT OF THE VIRUS
• 19-Oct-2020 18:30:40 - RBA MINUTES: CONTINUE TO CONSIDER HOW ADDITIONAL MONETARY EASING COULD SUPPORT JOBS
• 19-Oct-2020 18:30:43 - RBA MINUTES: THE AUSTRALIAN ECONOMY HAD EXPERIENCED THE LARGEST PEACETIME ECONOMIC CONTRACTION SINCE THE 1930S
• 19-Oct-2020 18:30:56 - RBA MINUTES: MEMBERS NOTED THAT THE DECLINE IN OUTPUT IN THE JUNE QUARTER HAD BEEN SMALLER THAN IN MOST OTHER COUNTRIES AND SMALLER THAN HAD BEEN EXPECTED
• 19-Oct-2020 18:31:06 - RBA MINUTES: RECOVERY WAS UNDER WAY IN MOST OF AUSTRALIA
• 19-Oct-2020 18:31:23 - RBA MINUTES: THE SECOND  COVID-19 OUTBREAK IN VICTORIA AND ASSOCIATED RESTRICTIONS ON ACTIVITY HAD BEEN HAVING A MAJOR EFFECT ON THE ECONOMY IN THAT STATE
• 19-Oct-2020 18:31:34 - RBA MINUTES: BOTH UNEMPLOYMENT AND UNDEREMPLOYMENT WERE EXPECTED TO REMAIN HIGH FOR AN EXTENDED PERIOD
• 19-Oct-2020 18:31:44 - RBA MINUTES: RECOVERY WAS LIKELY TO BE SLOW AND UNEVEN, AND INFLATION WAS EXPECTED TO REMAIN SUBDUED FOR SOME TIME
• 19-Oct-2020 18:31:46 - RBA MINUTES: ADDRESSING THE HIGH RATE OF UNEMPLOYMENT AN IMPORTANT NATIONAL PRIORITY
• 19-Oct-2020 18:32:07 - RBA MINUTES: BOARD AGREED TO PLACE MORE WEIGHT ON ACTUAL, NOT FORECAST, INFLATION IN ITS DECISION-MAKING
• 19-Oct-2020 18:32:08 - RBA MINUTES: AUSTRALIAN BANKING SYSTEM, WITH ITS STRONG CAPITAL AND LIQUIDITY BUFFERS, HAD REMAINED RESILIENT AND WAS HELPING THE ECONOMY TRAVERSE THE CURRENT DIFFICULT PERIOD
• 19-Oct-2020 18:32:25 - RBA MINUTES: BANK STOOD READY TO PURCHASE GOVERNMENT SECURITIES IN THE EVENT OF A RECURRENCE OF MARKET DYSFUNCTION

AUD/USD update

Prior to the Minutes, the Aussie was already under pressure following a trick of comments from

The RBA’s Assistant Governor (Financial Markets) Kent who give a speech at the IFR Australia DCM roundtable webinar and explained an easing bias at the board as follows: 

RBA Kent's comments finally send AUD/USD through support

Subsequently, AUD slipped below intra-day support as seen in the following 150min chart:

Description of the RBA minutes

The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.