The Reserve Bank of Australia (RBA) published the Minutes of its February monetary policy meeting on Tuesday, highlighting that the Board members decided the case for steady rates was the stronger one at this meeting. Additional details of the RBA Minutes suggest that the board agreed it was appropriate not to rule out another rise in rates.”
Key takeaways
“Board considered the case to hike by 25 bps or to hold steady.”
“Case to hold steady was the stronger one, appropriate given balanced risks to the outlook.”
“Data gave board more confidence inflation would return to target in a reasonable timeframe.”
“However, it would “take some time” before the board could be confident enough on inflation.”
“So, the board agreed it was appropriate not to rule out another rise in rates.”
“Board noted hiking rates would not prevent it from cutting should the economy weaken.”
“Noted forecasts of inflation back in target in 2025 assumed no further rate hikes.”
“Goods inflation had fallen faster than expected, service inflation still high.”
“Data on labor market, consumption had been weaker than expected.”
“High inflation, higher tax, and interest payments had weighed on consumption.”
“Labour market relatively tight, wage growth slowing in some sectors.”
“Financial conditions restrictive on some measures, less so on others.”
Market reaction
At the time of writing, the AUD/USD pair is trading near 0.6530, holding lower while losing 0.15% on the day.