Highlights
The Reserve Bank of Australia has published the minutes of its June 6 meeting. Officials at that meeting increased their main policy rate, the cash rate, by 25 basis points to 4.10 percent. The RBA has increased policy rates by a cumulative 400 basis points since an initial rate increase in May 2022.
Consistent with the statement accompanying the decision, the minutes note that recent data had shown a decline in headline inflation but persistent strength in core inflation and wage growth. Officials reiterated that inflation remains too high and is not expected to return to the top of their target range of 2.0 percent to 3.0 percent until mid-2025. The minutes also show that officials remain concerned that inflation could moderate more slowly than currently forecast if productivity growth does not recover from recent weakness or if inflation expectations move higher.
Officials noted that consumer spending has been weak in recent months and is expected to remain so for some time, reflecting the impact of tighter policy and cost of living pressures. Officials forecast GDP growth to slow this year before picking up again in 2024, but the minutes note ongoing concerns that the economy may weaken more sharply than currently anticipated.
Reflecting these uncertainties, the minutes show that officials considered leaving rates on hold this month as well as an increase of 25 basis points. Despite their concerns about the growth outlook, however, officials concluded that greater upside risks to the inflation outlook meant that further tightening at this meeting was warranted. They also reaffirmed that they will do"what is necessary" to return inflation to its target range, suggesting that further policy tightening will be considered in coming months.
Consistent with the statement accompanying the decision, the minutes note that recent data had shown a decline in headline inflation but persistent strength in core inflation and wage growth. Officials reiterated that inflation remains too high and is not expected to return to the top of their target range of 2.0 percent to 3.0 percent until mid-2025. The minutes also show that officials remain concerned that inflation could moderate more slowly than currently forecast if productivity growth does not recover from recent weakness or if inflation expectations move higher.
Officials noted that consumer spending has been weak in recent months and is expected to remain so for some time, reflecting the impact of tighter policy and cost of living pressures. Officials forecast GDP growth to slow this year before picking up again in 2024, but the minutes note ongoing concerns that the economy may weaken more sharply than currently anticipated.
Reflecting these uncertainties, the minutes show that officials considered leaving rates on hold this month as well as an increase of 25 basis points. Despite their concerns about the growth outlook, however, officials concluded that greater upside risks to the inflation outlook meant that further tightening at this meeting was warranted. They also reaffirmed that they will do"what is necessary" to return inflation to its target range, suggesting that further policy tightening will be considered in coming months.
Definition
The Reserve Bank of Australia (RBA) publishes minutes of its meetings with a two week lag. The text expands on the statement published two weeks earlier at the time of the announcement.
Description
Although the RBA's Reserve Bank Board issues a detailed statement at the conclusion of its monthly meetings, investors also look to the minutes for a more detailed description of current economic outlook both domestically and abroad along with the latest RBB policy thinking.
It is only recently that the RBA has released meeting minutes. At the conclusion of their December 2007 meeting, the RBA announced several changes to its communications policy. Previously, a statement was released only if a policy change was made. Now a statement is released at the conclusion of every meeting. Another change concerned the timing of the policy announcement. Rather than waiting until the next day, the announcement occurs immediately after the conclusion of the meeting. In addition, minutes are now released two weeks after the meeting.
It is only recently that the RBA has released meeting minutes. At the conclusion of their December 2007 meeting, the RBA announced several changes to its communications policy. Previously, a statement was released only if a policy change was made. Now a statement is released at the conclusion of every meeting. Another change concerned the timing of the policy announcement. Rather than waiting until the next day, the announcement occurs immediately after the conclusion of the meeting. In addition, minutes are now released two weeks after the meeting.
