RBA minutes: credible path back to CPI target with cash rate staying at its present level

Reserve Bank of Australia minutes, Headlines via Reuters

  • Board considered raising rates by 25bp or holding steady
  • Board agreed on case
    for holding rates steady was the stronger one
  • Board saw a “credible path” back to the inflation target with cash rates at
    current 4.1%
  • Board agreed it was
    possible some further tightening might be needed
  • Need for further
    hike would depend on data, evolving assessment of risks
  • Inflation heading in the right direction, though service inflation too high
  • Consumption had
    slowed significantly even as the full effect of past tightening yet to be
  • The labour market had
    been resilient, but early signs it might be at a turning point
  • Board saw “plausible
    scenarios” where inflation took longer than acceptable to return
    to target
  • Controlling
    persistent inflation would require more rate rises than otherwise
  • Staff inflation
    forecast had assumed one more hike, rates notably lower than in other
  • Rise in housing
    prices could mean financial conditions not as tight as assumed

While the RBA is keeping its options open these don’t read as minutes indicating the Bank is keen on raising the cash rate again. The default position now appears to be holding the cash rates steady.

The rate hike cycle so far, August was on hold:

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