RBA Tracker

Board Minutes stress being forward looking, or do they?

Today’s RBA Board Minutes rehashed previous statements that the Board remains vigilant to upside inflation risks, cannot rule anything in or out, and that policy needs to remain sufficiently restrictive until members are confident that inflation is moving sustainably towards the target. Old news.

While the Bank outlined scenarios where the cash rate may need to be increased again - largely revolving around the risk that the economy’s supply capacity is ‘materially’ lower than assumed - our sense is that the core Board deliberations are between the likelihood of maintaining the current stance of policy for an extended period and an easing in the cash rate within a shorter timeframe (say, by mid-2025).

It is important to remember that Bank staff and the Board are in the enviable position of not having to forecast the cash rate. They just need to be prepared for different economic outcomes which may entail different policy outcomes over time.

In terms of new information, two phrases jump out of the RBA Board Minutes published today: