RBA Minutes: Board Discussed Raising Cash Rate In June

The board of the Reserve Bank of Australia discussed the case for raising the cash rate at its June meeting citing slower-than-expected inflation but finally judged that the case to leave the rate unchanged was the stronger one, the minutes of the meeting showed Tuesday.

At the June meeting, the board governed by Michele Bullock had retained the benchmark rate at a 12-year high of 4.35 percent for a fifth straight time.

The board observed that there are some elevated upside risk around the forecast. Nonetheless, they noted that collective data received since the May meeting had not been sufficient to change their assessment that inflation would return to target by 2026.

“Members also affirmed their assessment that it was still possible to achieve the Board’s strategy of returning inflation to target in a reasonable timeframe without moving away significantly from full employment, even though this ‘narrow path’ was becoming narrower,” the bank said.

As economic uncertainty heightened at present, the board underscored the importance of paying close attention to the developments in the economic data.

The board repeated that returning inflation to target remains the highest priority of the board and it will do what is necessary to achieve that outcome.

Capital Economics’ economist Abhijit Surya said concerns about the economy will keep the Reserve Bank from hiking. The economist does not expect rate cuts before the second quarter of 2025.

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