The Reserve Bank of Australia (RBA) released the minutes of its July policy meeting on Tuesday, stressing that the “board agreed some further tightening may be required,” and adding that “they would reconsider at August meeting.”
RBA Additional conclusions
The board debated whether to hold rates constant or increase them by 25 bps.
Both sides made a case, but the board felt the arguments in favor of maintaining steady were better.
Board decided that additional tightening might be needed and that it will reconsider at its meeting in August.
The current monetary policy position was “clearly restrictive” and would only become worse.
The economy and potential consumption slowdowns were discussed by the board.
Risk of overly high unemployment due to noted stress on household resources.
The board saw that the inverted yield curve indicated tighter conditions and slower growth.
Additionally, delaying has risks. long for inflation to reach the desired level.
While other nations are experiencing sticky inflation, Australia’s rates are still lower than many other nations.
The labor market is extremely tight, and low productivity raises labor expenses.
Although domestic inflation had decreased, prices for rent, electricity, and food were still rising at a significant rate.
4% annual pay gain was observed in Q3 after the fair work award.
The economy had greatly slowed, with Q2 GDP growth being around +0.2% QoQ.
Consumer expenses was poor in Q2, but the housing market recovered to sustain it.
Market response
On the release of the Minutes, the Australian dollar is maintaining its recent uptrend and is presently trading at 0.6830, up 0.21% today.
