Minutes of the RBA's June meeting said policy needs to remain restrictive to
eliminate excess demand. The minutes were finalised before Brent crude fell more
than 10% last week, leaving their hawkish tone out of step with recent market
moves. Markets currently price only about 10bp of further tightening by year-end
and roughly 17bp of easing by 2027. The AUD is caught between the RBA's
readiness to hike if necessary and market bets that rates have likely peaked; if
incoming data confirm oil-driven disinflation, AUD could be repriced lower.
Declines in Sydney and Melbourne house prices increase domestic growth risk and
may accelerate dovish market repricing despite the RBA's still-tight rhetoric.
