RBA publishing minutes of its pivot meeting on one of the thinnest liquidity days of year

The Reserve Bank of Australia (RBA) has a third, unofficial, mandate. Its financial stability. This is in addition to their oft-stated official mandates of price stability (in a nutshell, controlling the inflation rate) and full employment. Indeed from the RBA website:

• Maintaining the stability of the financial system is a longstanding responsibility of the Reserve Bank. A stable financial system is one in which financial institutions, markets and market infrastructures facilitate the smooth flow of funds between savers and investors. This helps to promote growth in economic activity.
• The Reserve Bank has a role both in mitigating the risk of financial disturbances that may have systemic consequences, and in responding to a financial system disturbance should it occur. The Bank works on these matters with other relevant agencies, mainly through the Council of Financial Regulators (CFR). The CFR, which is chaired by the Reserve Bank Governor, brings together the Bank, APRA, the Treasury and ASIC, with a mandate to contribute to the efficiency and effectiveness of regulation and the stability of the financial system.

OK, I get that publishing the December meeting minutes on one of the most thinly traded days of the year is unlikely to cause ” financial disturbances that may have systemic consequences”, but it sure doesn’t help. Still, for traders, if you have some liquidity there is cash to be made.

The minutes are out at 11.30 am Sydney time, which is 0030 GMT and 1930 US Eastern time. I popped up a bit a preview here, but to save you a click (although there’s is more there) here it is again.

At its meeting on December 9–10, 2024, the Reserve Bank of Australia (RBA) maintained the cash rate target at 4.35%, marking the ninth consecutive meeting without a change.

In its statement, the RBA noted that while headline inflation had declined substantially, underlying inflation remained above the target range. The Board expressed increased confidence that inflation is moving sustainably towards the target, signaling a potential shift in monetary policy in the near future.

Governor Michele Bullock highlighted that recent economic data had been softer than expected, indicating a possible easing of inflationary pressures. She emphasized that the Board’s views are evolving in response to these developments, opening the door to a potential rate cut as early as February 2025 (although May is the current consensus).

The RBA’s (slightly) softened tone aligns with global trends, as several major central banks have begun easing monetary policies amid concerns over economic growth. The decision to hold rates steady reflects a cautious approach, allowing the Board to assess upcoming economic data before making further adjustments.

From the day:

• ForexLive Asia-Pacific FX news wrap: RBA on hold, less hawkish

• RBA’s Bullock: I don’t know if we’re going to be cutting rates in February
• RBA’s Bullock: We did not explicitly consider an interest rate cut today
• RBA’s Bullock: The change in wording today is deliberate
• RBA’s Bullock: We need to think carefully about where we’re going on policy

This article was written by Eamonn Sheridan at www.forexlive.com.