MNI BRIEF: RBA Board Considers Easing Scenarios - Minutes

MNI (SYDNEY) - The Reserve Bank of Australia board discussed a range of future scenarios that could force an adjustment to the 4.35% cash rate at the November meeting, but a cut would follow “more than one good quarterly inflation outcome,” the published minutes showed Tuesday.

The board reiterated its low tolerance for further bouts of high inflation, but considered scenarios that could see CPI fall faster than expected. “Perhaps in response to emerging signs that rental housing markets in many cities were moving into better balance or because the energy rebates have a more pervasive effect than factored in [e.g. if they have a broader effect on inflation expectations or price indexation than staff expect],” the minutes showed. (See MNI RBA WATCH: Governor Maintains Hawkish Language, Cash Rate)

Members also discussed a range of global risks that could upset the RBA’s forecasts, such as U.S. economic policy, Chinese stimulus measures and unsustainable growth in global government debt. “Members agreed that it was not yet possible to factor in events such as these, given pertinent details were unknown and still largely unpredictable, but that this would need to be done if these risks eventuated.”

The Board next meets Dec 18-19.