The Reserve Bank of Australia (RBA) held discussions at its June meeting regarding the potential increase of the cash rate, citing slower-than-anticipated inflation. However, the minutes released on Tuesday reveal that the board ultimately concluded that maintaining the rate was the stronger decision.
During the meeting governed by Michele Bullock, the RBA board opted to keep the benchmark rate steady at a 12-year high of 4.35 percent for the fifth consecutive time.
The board acknowledged some heightened upside risks surrounding the forecast but emphasized that the data collected since the May meeting did not sufficiently alter their assessment that inflation would return to target levels by 2026.
"Members also affirmed their assessment that it was still possible to achieve the Board's strategy of returning inflation to target in a reasonable timeframe without moving away significantly from full employment, even though this 'narrow path' was becoming narrower," the RBA stated.
Given the current economic uncertainty, the board stressed the importance of closely monitoring economic data.
Reiterating their primary goal, the board emphasized that returning inflation to target remains their highest priority, and they are prepared to take necessary actions to achieve this outcome.
Capital Economics' economist Abhijit Surya commented that concerns about the economy would likely prevent the RBA from raising rates. Surya anticipates no rate cuts before the second quarter of 2025.