Reserve Bank of Australia
Summary Headlines via Reuters, bolding is mine:
- Board considered rate rise of 25bp or holding steady and
reconsidering at later meeting - Arguments were “finely balanced” but board decided case for immediate hike
was stronger - Hike would provide
greater confidence inflation would return to target over “reasonable”
timeframe - Balance of risks to
inflation had shifted to the upside since May meeting - Longer inflation
remained above target more risk inflation expectations would rise - Service price
inflation not easing as yet, goods disinflation less than in some
other countries - Planned increases in
electricity prices and high rents added to inflation risks - Risk wages and
prices could become implicitly indexed to past high inflation - Productivity
disappointing and needed to pick up to offset wage increases - Fair work increase
in wages higher than expected, public wage awards also rising - Rebound in house
prices if sustained implied less drag on consumption than first
expected - Signs consumer
spending slowing further in Q2, some households under significant
financial pressure - Lags in policy meant
risk past tightening could lead to sharper economic slowdown - Falls in commodity,
shipping prices could lessen inflation pressure - Board to closely
monitor household spending, financial stress - Board reaffirmed
willingness to do what was necessary to bring inflation to target
Full text:
—
The minutes show then that:
- “Members recognised the strength of both sets of arguments, concluding that the arguments were finely balanced,”
- “They judged, though, that the case to raise the cash rate at this meeting was the stronger one.”
This was after inflation held stronger than expected. It seems to me the RBA is still wearing those rose-coloured glasses and are over-optimistic. The case for a rate hike appeared to be pretty much bordering on a no-brainer for me. The jobs data last week make me lean the same way for the next meeting, coming up on July 4. But the RBA don’t appear to share my view. And thus they risk slipping further behind the curve if they do not hike at the next meeting. I think that at the next meeting they’ll decide ‘on balance’ to hike.