Minutes of RBA’s August 11–12 meeting showed policymakers unanimously backed the 25bps cut to 3.60%, citing stronger evidence that inflation is heading sustainably toward the midpoint of the 2–3% target range. The Board agreed that full employment can be preserved while inflation continues easing, though members noted risks remain in both directions.
The central bank noted that some further reduction in cash rate likely to be needed “in the coming year”. But it also stressed that the pace of further reductions will be determined “meeting by meeting” as new data emerges. While some indicators still suggest a tight labor market and inflation projected to stay slightly above target in the medium term, private demand is recovering, supporting the case for a “gradual pace”.
At the same time, the minutes noted conditions that could justify a”slightly faster” pace of easing. If the labor market is already “in balance”, or if risks shift more clearly to the downside—whether through weaker global growth or slower employment handover—then a quicker reduction in the cash rate could be warranted to avoid undershooting inflation.
Overall, members concluded it is “not yet possible” to judge whether easing will be gradual or slightly faster. RBA left the door open for both paths, emphasizing that data will drive the speed of policy adjustments in the months ahead.
