The Reserve Bank of Australia (RBA) signalled it will remain cautious and data dependent on future policy moves, with the board seeing no immediate need to cut interest rates at its September meeting despite softer economic indicators and ongoing uncertainty abroad.
AUD/USD is barely changed.
Minutes released Tuesday showed the board kept the cash rate at 3.60%, following three earlier cuts this year, and said upcoming third-quarter inflation and consumption data will be key ahead of the November 4 meeting. Policymakers judged that monetary policy was “probably still a little restrictive”, but noted early signs that previous easing was supporting housing activity, with rising home prices and loan approvals.
The RBA said consumer spending had recovered faster than expected and was likely to persist, though some recent data suggested moderation. Monthly inflation readings for July and August, particularly in housing and services, pointed to potential upside risk for Q3 inflation, which markets view as pivotal for the timing of the next rate move.
The minutes also noted the labour market remains tight, with unemployment steady at 4.2%, though some members saw a risk that private-sector wage growth could slow faster than expected. Globally, the board cited uncertainty around U.S. tariffs and a weaker Chinese economy as ongoing downside risks.
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Reserve Bank of Australia minutes headlines via Reuters:
Board agreed no need for immediate reduction in cash rate
Future policy decisions to be cautious and data dependent
Market path for cash rate within estimates of neutral, but too imprecise to guide policy
Important to see what Q3 data showed on economy, supply capacity
Policy probably still a little restrictive, but difficult to determine
Pick up in housing prices, loans indicated past rate cuts were having an impact
Some time before full impact of past easing would be felt
Still risks on both sides for economy, consumption could be stronger but jobs and wages softer
Data, liaison suggested Q2 recovery in household consumption was likely to persist
Monthly CPI readings on housing, services suggested Q3 inflation could be above forecast
Board noted services inflation proving stubborn in other developed nations
Labour market still a little tight, forward indicators steady
Saw risk private sector wage growth could ease a little faster than expected
A$ close to estimates of equilibrium level given terms of trade, yield differentials
Considerable uncertainty about global outlook, US tariffs, China economy