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RBA minutes flag possible rate hike if inflation upside risks emerge

The RBA said it has more data on inflation, jobs, and GDP by its September meeting, and AUD/USD held near 0.7150 after the minutes were published.

Reported · Written up by our desk · Central Banks

FXStreet reports that the Reserve Bank of Australia published the minutes from its July monetary policy meeting, with the board indicating it was ready to raise rates if upside risks to inflation materialize.

According to the minutes, several board members saw inflation upside risks as “quite possible,” while others weighed offsetting downside risks and said there was “some time” to assess incoming data. The RBA also noted the current cash rate appeared to be working to bring the economy into balance.

The minutes outlined that the RBA would consider whether to increase the cash rate by 25 basis points or keep it unchanged, with uncertainty around where the cash rate sits relative to neutral. The RBA cited potential drivers of upside inflation risks including oil prices, pass-through of cost pressures, and a data center boom, while also saying it would need further progress in inflation data to be confident it returns to target.

FXStreet adds that the RBA minutes did not move the Australian dollar, with AUD/USD trading modestly flat near 0.7150 as of writing. The RBA also highlighted that housing market momentum has shifted, with prices falling, which could slow the economy.

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