Bonds & Rates
Home›Bonds & Rates›Central Banks›RBA minutes keep 4.35% on hold while signaling conditi…
RBA minutes keep 4.35% on hold while signaling conditional tightening
Minutes from the Aug. 10 to 11 meeting said some members weighed a 25bp hike, depending on whether upside inflation risks materialize.
Minutes from the Reserve Bank of Australia’s Aug. 10 to 11 meeting said the August decision to keep the policy rate at 4.35% was a genuine choice between tightening immediately and waiting for more evidence, according to Action Forex.
The board noted that inflation has eased and labor-market tightness has moderated, but it emphasized that inflation is still too high and the economy continues to operate with excess demand. Members explicitly considered a 25bp hike if inflation risks skew further upward, and they pointed to potential upside drivers including higher oil prices tied to a prolonged Middle East conflict, stronger cost pass-through, and investment themes such as AI and data centers.
Action Forex reported that the minutes also highlighted scenarios where bringing inflation back to target may require some spare capacity, particularly if the economy faces capacity constraints or adverse supply shocks. Despite the hold, the board judged that current policy appeared sufficiently restrictive to return inflation to target within a reasonable timeframe, while allowing more time to assess incoming inflation, labor-market, and activity data.
The minutes, as summarized by Action Forex, framed the outcome as a conditional tightening bias rather than a completed hiking cycle, with the board warning that more progress is needed before it can be confident inflation will return to target under the current policy setting.