RBA meeting minutes from November 7 reveal a decisive step in monetary policy adjustment, with a 25bps increase in cash rate to 4.35%. This move reflects the RBA’s heightened focus on managing inflationary pressures and aligning with its long-term targets.
The members’ discussion was centered around two options: raising the cash rate or maintaining it at its current level. The decision to increase the rate was influenced by the consensus that this was the “stronger” course of action.
Achieving inflation targets by the end of 2025 played a significant role in the decision-making process. RBA members acknowledged an increased risk of not meeting these targets, suggesting the necessity of a prompt policy response.
The minutes also reveal a strategic consideration of future scenarios. Delaying the rate adjustment was seen as potentially necessitating a “larger” policy response in the future, especially if inflation pressures intensify.
Preventing a significant rise in inflation expectations was another critical concern. The RBA aimed to avoid any shift in market sentiment that could destabilize inflationary trends. This is particularly relevant given the Board’s emphasis on “low tolerance” for delayed inflation target achievement.
Also, staff’s inflation forecasts, which anticipated one or two rate rises, further underscored the necessity of the rate hike.