Australia's central bank is laser-focused on returning inflation to its target band in its preferred time frame and is unlikely to stomach a delay.
Subscribe now for unlimited access.
or signup to continue reading
The minutes from the October Reserve Bank of Australia meeting confirmed the board's resolution to return inflation to the two-to-three target range by late 2025.
The October meeting, the first under the leadership of new governor Michele Bullock, resulted in the fourth decision in a row to put rates on hold.
This followed an aggressive series of 12 interest rate hikes targeted at fast-rising consumer prices.
Inflation has moved past its peak but the RBA remains alert to price pressures and is prepared to hike interest rates further if needed.
"The board has a low tolerance for a slower return of inflation to target than currently expected," the minutes read.
Risks to the timeline included slow progress on services inflation and higher retail petrol prices, which could shift household expectations of inflation.
"Members acknowledged that upside risks were a significant concern given how long inflation is likely to remain above target," the minutes read.
The recovering housing market was also nestled under the case for another hike, with the "wealth effect" potentially supporting higher household spending.
"The rise in housing prices could also be a signal that the current policy stance was not as restrictive as had been assumed, although there was other evidence that monetary conditions were tight," the minutes read.
The case for keeping interest rates on hold was little changed from earlier communications and centred on the lag time between interest rate hikes and their impact on the economy.
"At the same time, inflation had abated from its peak in December 2022, consumption growth was weak and households' real disposable incomes were still falling."
The board was also aware that it had not taken in enough new data to adjust its tactics.
As flagged by several economists, the central bank will get new inflation, economic activity, and labour market data - plus a fresh set of staff forecasts - ahead of the November meeting.
Australian Associated Press
