- Sees upside risks to inflation
- Expects a period of subdued economic growth will be required to bring inflation down
- Ready to raise cash rate again if needed
- Not ruling out further rate hikes, need more information
- The board discussed raising the cash rate today
- Did not discuss a rate cut, only a rate hike or a stay
- Thinking hard about when it might be appropriate to raise interest rates
- We didn’t discuss a rate hike in the previous meeting but did this time
- The argument in favour of a rate hike was inflation is still too elevated with upside risks potentially
- There is a bit of flow through of higher cost pressures, keeping alert to that
- Decided to wait for a bit more information but rate hike is still front of mind
- We need economic growth to slow, less tightness in the labour market
- Quite possible we might need to raise cash rate again
- We are aware of upside risks to inflation but we already raised cash rate three times before this
The comments from Bullock are nothing all too surprising. She is mainly just reaffirming that they are still in a position to raise the cash rate further, with that option being the only other plausible step they are considering. But given current conditions and what the data is saying, they are not seeing an urgent need to take that step just yet.
As such, the RBA will just want to bide their time and let the impact of previous rate hikes filter through to the economy further.
But amid upside risks from the Middle East conflict being prolonged, there’s still a likelihood that they need to do more at some point. However, Bullock is not indicating much urgency to do so as of right now even if the board did discuss a rate hike today.
And she is firm about that by constantly reiterating that “we have already raised the cash rate three times”, adding that policy is now “restrictive and tight”.
AUD/USD remains little changed at 0.7050 on the day currently.
This article was written by Justin Low at investinglive.com.