Latest monetary policy decision by the RBA – 1 June 2021

  • Prior 0.10%
  • 3-year bond yields target 0.10%
  • 3-year government bond yields is consistent with RBA target
  • Australian recovery is stronger than earlier expected and is forecast to continue
  • Central scenario is for GDP to grow by 4.75% over this year and 3.50% over 2022
  • An important ongoing source of uncertainty is the possibility of significant outbreaks of the virus, although this should diminish as more of the population is vaccinated
  • While a pick-up in inflation and wages growth is expected, it is likely to be only gradual and modest
  • RBA will consider in July whether to retain the April 2024 bond as the target bond for the 3-year yield target or to shift to the next maturity, the November 2024 bond
  • RBA is not considering a change to the target of 10 basis points
  • AUD remains in the upper end of the range of recent years
  • RBA will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range
  • This is unlikely to be until 2024 at the earliest
  • Full statement

The aussie dropped on the decision from 0.7760 to 0.7740 against the dollar but honestly, I don’t see anything in there that is a material difference to the May policy meeting.

There was a slight downside risk bias added to the statement as the RBA acknowledged the recent virus situation in Victoria but they did also brush it off to saying that it should be easily dealt with as vaccinations start to pick up across the country.

Besides that, we’ll just have to wait until July for any changes by the RBA.

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