The minutes suggested that members saw strong opposing forces weighing on inflation. "A lengthy period of inflation above the target was occurring, with attendant risk that this would begin to affect wage setting, though there was no evidence of this in aggregate wages data to date. If that occurred, the cost of reducing inflation later would be greater," the minutes read.

On that basis, the RBA left the benchmark interest rate unchanged at 7.25%, as expected.

However, the minutes also suggested that, "given there had been a significant change in borrowing behaviour, confidence was weaker, asset prices had declined and slower overall growth was in prospect, tighter financial conditions were not warranted. Indeed, less restrictive conditions could soon be called for, otherwise the risk of a deeper and more persistent slowing in the economy would increase. On these considerations, a case could be made for an early reduction in the cash rate."

The remark is consistent with those made on Aug. 11 when the RBA's quarterly bulletin reaffirmed that the central bank has room for lower interest rates given slowdowns in demand.

"On the assumption that the subdued demand conditions are likely to continue, scope to move to a less restrictive monetary policy stance in the period ahead is increasing," read the monetary policy statement.

By Erik Kevin Franco, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Nancy Girgis, This email address is being protected from spam bots, you need Javascript enabled to view it

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