The Reserve Bank of Australia (RBA) continues to diligently monitor potential upward trends in inflation, with the board confirming that monetary policy will need to remain sufficiently restrictive until inflation consistently moves toward the target, as outlined in the minutes from the policy board meeting on November 4 and 5.
The minutes, released on Tuesday, indicated that a quicker-than-anticipated decrease in inflation might justify a reduction in the policy rate. However, the board emphasized the need to observe several positive quarterly inflation results to be assured of a sustained inflation decline. At its November meeting, the RBA maintained its cash rate target at a 13-year peak of 4.35 percent, following a 25 basis point increase in November 2023.
During the meeting, board members considered various scenarios that might necessitate adjustments in monetary policy. One particular scenario focused on consumption trends. The minutes revealed that members concurred that if consumption consistently and substantially fell short of staff projections and was deemed likely to significantly dampen inflation, a cash rate target reduction could be justified.
Moreover, the board concurred that adjustments to monetary policy might be required if it was determined that the current policy stance was less restrictive than previously assessed.
In conclusion, board members acknowledged the impossibility of definitively ruling out future modifications to the cash rate target, as indicated in the minutes.
