MNI BRIEF: RBA Discussed 50bp, All Options On Table - Minutes

The Reserve Bank of Australia underlined that it is not on a pre-set path by noting it was prepared to revert back to 50bp hikes or even pause depending on the flow of economic data, according to minutes of the November 1 meeting released Tuesday.

The Board discussed both a 25bp and 50bp hike but "agreed that acting consistently would support confidence in the monetary policy framework among financial market participants and the community more broadly." The RBA downshifted to a 25bp hike at its October meeting and is expected to raise rates another 25bp at Its December meeting after lifting them to 2.85% in November. (See MNI RBA WATCH: Hikes 25bp, To Miss Inflation Target Until 2025)

The RBA said the arguments for a 50bp hike stemmed from the current inflation environment and the upside risks from the tight labour market and rising energy prices and rents. However, the case for 25bp was viewed as the "stronger one".

However, the minutes showed the RBA retained policy flexibility, "prepared to keep rates unchanged for a period while it assesses the state of the economy and the inflation outlook."