Reserve Bank minutes in focus after shock rate decision
Australia's central bank shocked markets and disappointed borrowers earlier in July when it opted to keep the cash rate on hold at 3.85 per cent, defying expectations of a 25 basis point cut.
The RBA will on Tuesday release the minutes of its last board meeting, potentially offering a glimpse of what lies ahead for its next decision on August 12.
Weaker-than-expected jobs data has narrowed expectations of an interest rate cut next month, after unemployment rose from 4.1 per cent to 4.3 per cent in June, despite economists' expectations of a steady print.
The employment figures were released on Thursday and could render the minutes slightly outdated, and a greater focus will be on RBA governor Michele Bullock's speech at Sydney's Anika Foundation on Thursday.
Interest rate markets have almost fully priced-in a 25 basis point cut to the official cash rate at the August meeting, and project the rate will fall to 3.2 per cent by the end of the year.
Each 25 basis point cut to the cash rate would shave roughly $90 off monthly repayments on a $600,000 mortgage.
In further signs Australia's idling economy may need a boost, government spending continues to drive the bulk of new project activity, accounting for 80 per cent of new investment in the June quarter, a Deloitte Access Economics report shows.
The overall project pipeline continued to grow but state budgets suggest a transition to more cautious spending, the report found, with a focus on completing existing projects over announcing new ones.
While infrastructure spending helped economies recover from the COVID-19 pandemic, many governments now face higher debt levels, rising interest costs and project budget overruns, Deloitte associate director and lead author Sheraan Underwood said.
"Australia's infrastructure boom isn't over," he said.
"But with governments under growing fiscal pressure, stronger private sector investment will be key to supporting the next phase of economic growth."
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