MNI BRIEF: Staff See 1-2 More Hikes In Forecasts - RBA Minutes
The Reserve Bank of Australia board noted the recently updated inflation forecasts found within the November Statement on Monetary Policy would have been higher if Reserve staff had not factored in one or two more rate rises, the recently published minutes from this month’s meeting showed.
The RBA board lifted the cash rate 25bp to 4.35% earlier this month, its highest level since 2011. MNI reported today November’s statement embedded an more aggressive policy stance. (See MNI POLICY: RBA's Fresh Forecasts Embed Strong Rates Profile)
Within the minutes, the board noted further hikes would depend on incoming data and whether it altered its outlook. The board had entertained holding the cash rate at 4.1% this month, noting inflation expectations remained broadly anchored. “There was a credible case that a somewhat slower return of inflation to target did not warrant a policy response at this meeting,” the minutes showed. However, the RBA saw risks inflation expectations could rise without an increase.
The board next meets Dec 5.