RBA June board meeting minutes released, showing it could hike again
Australian homeowners could soon be slugged with an interest rate hike, with the latest minutes from the Reserve Bank of Australia revealing the board is ready to raise rates to slow inflation if “inflation expectations” change.
The discussion, held on June 17 and 18, shows the board, led by RBA Governor Michele Bullock, hold persistent fears about rising prices and the challenge to bring inflation back to its target band of 2-3 per cent.
“Members acknowledged that if inflation expectations were to rise materially from current levels, it could require significantly higher interest rates to bring inflation back to target, with adverse implications for growth in output and employment,” the minutes show.
Those expectations of rising inflation hit Australia just days later on June 26, when the ABS reported the monthly consumer price index had jumped to 4 per cent in the year to May, up from 3.6 per cent in April.
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Economists had expected a more modest increase of 3.8 per cent.
The RBA June 18 minutes show the board will not hesitate to raise rates if necessary. NewsWire / Nikki Short Credit: News Corp Australia
The RBA held rates steady at 4.35 per cent in June, but reiterated it would be ready to hike them if necessary.
“Raising the cash rate at this meeting could be appropriate if members formed the view that policy settings were not sufficiently restrictive to return inflation to target within a reasonable time frame,” the minutes state.
“This could be the case if it was judged that inflation was returning to target more slowly than previously assumed or that the gap between aggregate demand and aggregate supply was not closing quickly enough.”
More to come