RBA minutes: Possible cash rate will stay steady for an extended period

Reserve Bank of Australia August meeting minutes

• The Reserve Bank of Australia considered a case to raise rates but decided that a steady outcome better balanced the risks.
• The RBA mentioned that the cash rate might have to stay steady for an “extended period.”
• The RBA members agreed it is unlikely that rates would be cut in the short term.
• The RBA emphasized the need to be vigilant to upside risks to inflation, and that policy would need to remain restrictive.
• The RBA noted that an immediate hike in rates could be justified if risks to inflation had increased “materially.”
• The RBA suggested that keeping rates steady for a longer period than implied by markets could help restrain inflation.
• The RBA board stated that they would need to reassess this possibility at future meetings.
• The RBA board judged that the risks had increased that inflation would not return to target in a reasonable time frame.
• The RBA board indicated that they had limited tolerance for inflation remaining outside of the target band.

The minutes lean hawkish:

• considered a case to raise rates
• unlikely that rates would be cut in the short term

but there is wiggle room, this, for example:

• would need to reassess … at future meetings

But, if you want a one-word summary I think ‘hawkish’ would best fit. Agree/disagree – let me know in the comments.

AUD/USD is circa 0.6731 and not a lot changed.

The most recent update on the Reserve Bank of Australia website re the cash and inflation rates

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