Minutes from RBA’s June 6 monetary policy meeting reveal an active debate over whether to hold or raise the cash rate by 25bps.
As stated in the minutes, “Members recognised the strength of both sets of arguments, concluding that the arguments were finely balanced.” However, they ultimately determined that a rate increase was the stronger course of action at this meeting.
Recent data indicating that inflation risks had begun tilting to the upside were a key influence on the board’s decision. As they noted, “Given this shift and the already drawn-out return of inflation to target, the Board judged that a further increase in interest rates was warranted.”
Such a move would bolster confidence that inflation would indeed return to the target range “over the period ahead”, they reasoned.
At the meeting, RBA raised cash rate target by 25bps to 4.10%.
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