Minutes from the Reserve Bank’s August monetary policy meeting and wages data released today point to a widely anticipated rate cut when the RBA meets next month.
Despite the risk of inflation, minutes from the bank’s meeting showed the risk of a “deeper and more persistent slowing” in the economy was providing a growing case for a reduction in the cash rate.
“Indeed less restrictive [financial] conditions could soon be called for, otherwise the risk of a deeper and more persistent slowing in the economy would increase,” the minutes said.
Elsewhere The Melbourne Institute’s Wages Report today also showed growth in total pay slowed to a rate of 4.9 per cent in August, from 7.5 per cent in the 12 months to May.
Edda Claus, a Melbourne Institute research fellow, said high energy and food prices were simply not feeding through to wages.
“This gives the RBA room for a loosening in monetary policy,” Dr Claus said.
The outcome of the Reserve Bank’s next meeting will be revealed on Tuesday 2 September.
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