Highlights
The Reserve Bank of Australia has published the minutes of its July 4 meeting. Officials at that meeting left their main policy rate, the cash rate, on hold at 4.10 percent. Prior to this meeting the RBA had increased policy rates at every meeting since an initial rate increase in May 2022 by a cumulative 400 basis points.
Consistent with the statement accompanying the decision, the minutes note that recent data had shown a further 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.
Officials noted that economic growth has slowed considerably in recent months, reflecting the impact of tighter policy and higher inflation. They also noted that the full impact on the economy of previous policy tightening had yet to be seen and warned of downside risks to the growth outlook.
Reflecting these uncertainties, the minutes show that officials considered another increase of 25 basis points as well as leaving rates on hold this month. Despite their ongoing concerns about upside risks to the inflation outlook, however, officials concluded that the fact that policy has already been tightened so aggressively meant there was now an opportunity to pause and reassess next month when updated economic forecasts will be prepared. They reaffirmed, however, that they will do"what is necessary" to return inflation to its target range and advised that it may be necessary to tighten policy further in coming months.
Subsequent to this meeting the RBA announced that it will implement a number of changes to its operations and procedures as recommended in an independent review presented to the government earlier in the year. Most notably, the number of meetings per year will be reduced from eleven to eight and meetings will be held over two days, starting in 2024. Last week the government announced that RBA Governor Philip Lowe will not be reappointed when his current terms expires in September, but will be replaced with Deputy Governor Michele Bullock.
Consistent with the statement accompanying the decision, the minutes note that recent data had shown a further 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.
Officials noted that economic growth has slowed considerably in recent months, reflecting the impact of tighter policy and higher inflation. They also noted that the full impact on the economy of previous policy tightening had yet to be seen and warned of downside risks to the growth outlook.
Reflecting these uncertainties, the minutes show that officials considered another increase of 25 basis points as well as leaving rates on hold this month. Despite their ongoing concerns about upside risks to the inflation outlook, however, officials concluded that the fact that policy has already been tightened so aggressively meant there was now an opportunity to pause and reassess next month when updated economic forecasts will be prepared. They reaffirmed, however, that they will do"what is necessary" to return inflation to its target range and advised that it may be necessary to tighten policy further in coming months.
Subsequent to this meeting the RBA announced that it will implement a number of changes to its operations and procedures as recommended in an independent review presented to the government earlier in the year. Most notably, the number of meetings per year will be reduced from eleven to eight and meetings will be held over two days, starting in 2024. Last week the government announced that RBA Governor Philip Lowe will not be reappointed when his current terms expires in September, but will be replaced with Deputy Governor Michele Bullock.
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.
