SYDNEY, Reuters – Australia’s central bank is set to cut interest rates if the labour market fails to improve further, an outcome brought closer by recent disappointing data on unemployment.

Minutes of the Reserve Bank of Australia’s (RBA) May policy meeting out on Tuesday dropped an oft-repeated sentence that ‘there was no strong case for a near-term adjustment to rates’, suggesting a cut might be close.

Markets are wagering an easing, the first since mid-2016, could come as soon as June. The timing could be clearer once RBA Governor Philip Lowe gives a highly anticipated speech later on Tuesday.

Earlier this month, the RBA cut forecasts for economic growth while extending the timeframe for achieving a lower jobless rate and higher consumer prices.

Those predictions were based on the market assumption of at least two interest rate cuts this year.

“This implied that, without an easing in monetary policy over the next six months, growth and inflation outcomes would be expected to be less favourable than the central scenario,” the minutes showed.

RBA board members put the onus on a continued decline in the unemployment rate to decide the future path for interest rates, the minutes showed.

While economic data have generally disappointed in recent months, the jobs market had remained resilient. However, latest figures point to still-high spare capacity even as hiring beats forecasts.

Data released after the RBA’s last meeting showed the unemployment rate surprisingly ticked up from near decade lows to reach 5.2%, prompting many economists to predict a rate cut as soon as next month.

The labour market slack is one reason annual wage growth has stagnated at a tepid 2.3% while inflation has undershot the RBA 2-3% target for almost 2-1/2 years now.

“In view of the spare capacity that remained in the economy…members agreed that it was important to continue to pay close attention to developments in the labour market and set monetary policy to support sustainable growth in the economy and achieve the inflation target over time,” the minutes showed.

Financial markets are pricing in a 50-50 chance of a 25-basis point cut in June.

A majority of the 40 economists polled by Reuters in late-April have forecast at least two cuts this year. National Australia Bank is the only one of the country’s four major banks to predict a June cut.

CBA sees a steady path, Westpac has predicted a cut in May and ANZ is still undecided.

The RBA acknowledged the effect of an even lower cash rate on the economy could be smaller than in the past given high household debt and crumbling property prices.

“Nevertheless, a lower level of interest rates could still be expected to support the economy through a depreciation of the exchange rate and by reducing required interest payments on borrowing, freeing up cash for other expenditure,” the minutes showed.

Many of the RBA’s global peers, including the United States, have taken a marked dovish turn in recent months citing a slowdown in world growth.

The RBA noted trade tensions remained a continued source of uncertainty for the global outlook. Australia is heavily leveraged to global trade, with China its No.1 trading partner, so any deceleration in momentum overseas will likely be negative for its economy.