Goldman’s read raises the risk that the next RBA move comes sooner than its own base case. That leaves the third-quarter CPI release as the main event for the Australian dollar and short-dated bond yields. The minutes’ emphasis on domestic capacity shifts the focus from energy pass-through to underlying inflation, so even a moderate headline print could carry hawkish weight if services and core measures stay firm. Oil still matters at the margin: the minutes noted that domestic fuel prices were running well above the RBA’s August assumptions, and a renewed jump in crude tied to the Iran war would strengthen the case for tightening. Market pricing had already leaned toward further hikes before the September decision, so a hot CPI reading could quickly firm up expectations for November.
—
Goldman isn’t calling a November hike yet, but it thinks the RBA minutes have opened the door, and the CPI report later this month will decide whether the board walks through it.
Summary:
- Goldman Sachs economists said minutes of the RBA’s September meeting were more hawkish than the press conference that followed the decision, citing three reasons
- Among them, the minutes showed increased concern about domestic capacity pressures, with July’s stronger-than-expected CPI data seen as evidence of that
- Goldman still expects the RBA to keep the cash rate at 4.60% in November, but says the minutes have lowered the bar for another hike, conditional on third-quarter CPI
- The minutes showed the board judged excess demand to be greater than previously assessed and said it would raise rates further if required
- Third-quarter CPI data are due on 28 October, ahead of the RBA’s 2 to 3 November meeting
Minutes of the Reserve Bank of Australia’s September policy meeting have likely lowered the bar for another interest rate increase in November, according to Goldman Sachs economists. The bank still expects rates to stay on hold.
In a report, three members of Goldman’s economics research team said they viewed the minutes, released on Tuesday, as more hawkish than Governor Michele Bullock’s press conference after the decision, for three reasons. Among them, the economists said the minutes showed increased concern about domestic capacity pressures, with the board treating July’s stronger-than-expected inflation data as evidence of that.
Goldman continues to expect the RBA to hold the cash rate at 4.60% at its next meeting. However, it judged that the minutes have lowered the threshold for a further hike in November, depending on the outcome of the third-quarter consumer price index report.
The minutes support that reading. They showed the board unanimously raised rates by 25 basis points at the 28 to 29 September meeting because several upside risks to inflation flagged in August had either materialised or were building. Those risks included a broader Middle East conflict pushing oil prices higher, cost pressures from the global AI boom, and tighter domestic capacity than assumed. Members said excess demand in the economy appeared greater than previously assessed. Staff increasingly questioned whether the unemployment rate consistent with target inflation was higher than thought, and business surveys pointed to a drift higher in firms’ inflation expectations.
The board also noted that, if global neutral interest rates have risen, the previous 4.35% cash rate was less restrictive than it had been two years earlier. It said holding steady while other central banks tightened could loosen Australian financial conditions through a weaker currency. Members concluded that they would remain attentive to incoming data and would raise rates further if required.
The third-quarter CPI report, due on 28 October at 00:30 GMT (20:30 ET on 27 October), now looks pivotal. The RBA’s next decision follows on 3 November at 03:30 GMT (22:30 ET on 2 November), alongside its updated quarterly forecasts. A strong reading on underlying and services inflation would test Goldman’s hold call and could push the board toward a second consecutive increase.
—
If nothing in November the RBA has another crack in December before a long break until the next meeting 8–9 February 2027:
This article was written by Eamonn Sheridan at investinglive.com.