A rate cut discussion is on the cards for the RBA's first meeting of the year as households keep their wallets shut.
. Financial markets are predicting about a 50:50 chance of another 0.25 percentage point reduction by the middle of next year while a number of economists are tipping up to two cuts of that size by June., is wary that it may have to slice them further, largely due to the way households have curtailed their spending. Fresh economic forecasts will be assessed at its first meeting of the year in February, with the bank making clear it will cut rates again if necessary.
"The board would continue to monitor developments, including in the labour market, and was prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time." The minutes also suggest the bank is not as upbeat about the state of the economy as the Morrison government in its. The update showed the government expecting unemployment to climb, jobs growth to slow, household consumption to quicken and wages to lift by 2.5 per cent through 2020-21.
But the minutes show the RBA's feedback from the business sector points to ongoing slow wages growth and retail activity. The concern about consumer spending was highlighted in the Commonwealth Bank's monthly measure of household spending intentions, which showed only a minor lift through October and November. Those months included the RBA's latest interest rate cut plus the bulk of the government's $5.5 billion lift in tax refunds.
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