RBA considered a rate hike during August meeting, minutes show
2024.08.19 21:57
Investing.com– The Reserve Bank of Australia had considered raising interest rates earlier in August, the minutes of its recent meeting showed, amid persistent concerns that inflation will remain sticky for longer.
But the central bank settled on a hold, keeping its unchanged at 4.35%.
Members of the central bank’s rate-setting committee noted that the risk of inflation not reaching the RBA’s 2% to 3% annual target by late-2025 had “risen materially,” the minutes showed.
There were also growing doubts over whether current monetary conditions were restrictive enough to bring back within the RBA’s target. These concerns saw policymakers consider a potential hike.
Governor Michele Bullock, speaking after the meeting, had also warned that the RBA could hike rates in the face of sticky inflation.
But while underlying inflation still remained well above the central bank’s target, a reading for the June quarter showed some easing in inflation across the board.
Policymakers also decided to leave rates unchanged to “balance the risks to both inflation and the labor market.”
Australia’s labor market ran red-hot in recent months, presenting more upside risk for inflation. This trend also gives the RBA more impetus to potentially raise rates further.
Policymakers were uncertain about just how the RBA will move rates in the coming months, and that “it was not possible to either rule in or rule out future changes in the cash rate target.”
Analysts expect the RBA to keep rates on hold until at least the first quarter of 2025, and that it will begin cutting rates later in the year.
