RBA Vigilant To Upside Risks To Inflation, Minutes Show

(RTTNews) - The Reserve Bank of Australia remained vigilant to upside risks to inflation and the board affirmed that the policy would need to be sufficiently restrictive until inflation moves sustainably towards the target, according to the minutes of the policy board meeting held on November 4 and 5.

Faster-than-expected decline in inflation could warrant an easing in the policy rate but that they would need to observe more than one good quarterly inflation outcome to be confident that such a decline in inflation was sustainable, the minutes showed Tuesday. In November, the bank had kept its cash rate target unchanged at a 13-year high of 4.35 percent. The bank had previously changed its rate in November 2023, when it was lifted by 25 basis points.

At the November meeting, members discussed various scenarios in which they need to adjust monetary policy.

One such scenario was centered around the judgment on consumption. "Members agreed that if consumption proves to be persistently and materially weaker than the staff forecast, and this was judged likely to lower inflation significantly, a reduction in the cash rate target could be warranted," the minutes said.

Finally, members agreed that monetary policy might need to be adjusted if the Board formed the view that the stance of policy was not as restrictive as had been judged.

Members agreed that it was not possible to rule anything in or out in relation to future changes in the cash rate target, the minutes said.