19/02 Indices, page-13

RBA Considered Rate Hike Before Opting to Keep Rates Steady, Said 'Not Yet Possible' to Rule Out Further Rate Increases

Feb 20, 202412:11 GMT+11

XJO−0.37%
The Reserve Bank of Australia's board considered a 25-basis-point hike before opting to leave cash rates unchanged at its February policy meeting.
The board noted that inflation was expected to take a further two years or so to return toward the midpoint of the RBA's target range under the central forecast, consistent with the assessment that aggregate demand remained above the economy’s supply potential.
"Members noted that an increase in the cash rate target at this meeting could slow the growth of demand further and reduce the risk of inflation not returning to target in an acceptable timeframe," according to minutes of the policy meeting released Tuesday.
The board noted that raising the cash rate target wouldn't prevent the board from easing monetary policy should the economy weaken more sharply than expected.
The board eventually opted to keep rates steady, citing the faster-than-expected moderation of inflation in previous months, additional confidence in the further moderation of Australian inflation, and weaker-than-expected labor market and consumer spending data.
The case to leave the cash rate target unchanged was the "stronger" one and would "best balance the board’s objectives for price stability and full employment," according to the minutes.
However, the board warned that inflation remained high despite its moderation and it was "not yet possible to rule in or out further increases in interest rates."