"Leading indicators of employment had increased further and were consistent with employment growth in the months ahead." But the central bank said low inflation will allow it to cut the cash rate if jobs growth flattens out or the global economy goes into meltdown. "Continued low inflation would provide scope to ease policy further, should that be appropriate to lend support to demand," the minutes said.

 

In the US session PPI, empire State Manufacturing Index and Retail Sales figures were published. The Producer Price Index for final demand fell 0.2% in February, seasonally adjusted, in line with market expectations. Final demand prices advanced 0.1% in January and declined 0.2% in December. On an unadjusted basis, the final demand index was unchanged for the 12 months ended in February. The decrease in the final demand index in February can be traced to prices for final demand goods, which moved down 0.6%. The index for final demand services was unchanged. The index for final demand less foods, energy, and trade services inched up 0.1% in February after increasing 0.2% in both January and December. 

 

Separate report on Empire State Manufacturing Index, showed increase to 0.6, well above expected incline to -10.3. The new orders and shipments indexes rose well above zero for the first time in several months, pointing to an increase in both orders and shipments. Price indexes suggested a slight increase in input prices and a small decline in selling prices. Labor market conditions were little changed, with employment and the average workweek holding fairly steady. The six-month outlook improved, with the index for future new orders rising to its highest level in more than a year.

 

U.S. retail sales dropped in February and the prior month’s gain was revised to a decline, calling into question the narrative that bigger gains in consumer spending would propel economic growth at the start of 2016. The 0.1% decline in purchases followed a revised 0.4% January decrease, Commerce Department figures showed Tuesday. Sales excluding gasoline rose 0.2% in February, reversing the previous month’s retreat.

 

There will be no major data releases from Australia tomorrow. In the US session Building Permits, Housing Starts, CPI and Industrial Production figures are scheduled for a release, though the focus will be on FOMC rate decision and the following press conference. Analysts predict no significant change in Building Permits and Housing Starts, while CPI and Industrial Production are expected to decrease by 0.2%. FOMC decision and press conference should bring a lot of volatility to the markets, though rates should remain unchanged.

 

Figures to watch:

 

Building Permits/Housing Starts (Wednesday 13:30)

CPI (Wednesday 13:30)

Industrial Production (Wednesday 15:15)

Federal Funds Rate/FOMC Statement/FOMC Economic Projections (Wednesday 19:00)