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RBA considered 50bps, 25bps, and no change at Dec meeting

Minutes of RBA’s December 6 meeting indicates that the board has considered three interest rate options of a 50bps hike, a 25bps hike, and no change.

The argument for a 50bps increase stemmed from inflation remains “too high”, and there were factors support a “more pre-emptive action”. For a 25bps increase, the board acknowledged there had bee already a “significant cumulative increase” in interest rates and they would “begin to have more of an effect through the course of 2023″. The arguments for now chance placed”further emphasis of the lagged effect” of prior rate increases.

Board members eventually decided that the case for 25bps increase was the”strongest one”, as further hike was “likely to be necessary”. Members also noted the “importance of acting consistently”.

The minutes also reiterated that “the Board expects to increase interest rates further over the period ahead, but it is not on a pre-set path. Members noted that the size and timing of future interest rate increases would continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.”

Full minutes here.

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