Minutes from the Reserve Bank of Australia’s August board meeting, released on Tuesday, indicate that policymakers considered raising the cash rate by 25 basis points from 4.35% but ultimately voted to maintain the rate unchanged.
The nine-member board debated the move as inflation remained above the RBA’s 2% to 3% target range. Headline inflation eased to 3.9% in the second quarter, down from the RBA’s May forecast of 4.8%, though trimmed mean inflation is expected to stay above 3% until mid-2027 before easing toward 2.5%.
Market pricing reflects limited conviction in an imminent hike. Interest rate futures indicate a roughly 13% probability of a 25 bps increase at the RBA’s next meeting on September 28-29, which would lift the cash rate to 4.60%. The likelihood of a hike rises to about 67% by February 2025, according to current pricing.
The RBA’s outlook also included a gradual rise in unemployment to 4.8% by the end of 2028, alongside a projected slowdown in economic growth throughout 2026 before a return to balance in 2027. National residential property prices have declined by about 1.5% from their March peak, reflecting softer housing market conditions.
The minutes come as the central bank balances inflation risks against signs of economic moderation, with policymakers monitoring labor market and price pressures ahead of the September decision.
