RBA May meeting minutes show further interest rate rise to be considered

Reserve Bank of Australia meeting minutes showed the board considered raising rates in May before ultimately deciding to keep policy steady, amid concerns that inflation doesn’t slow down as quickly as initially expected.

The meeting minutes indicate that inflation in Australia has has declined more slowly than expected, as recent data and other information signal that inflation risks have increased somewhat.

“Members agreed that it was important to convey that recent data and other information signaled that inflation risks had increased somewhat,” the meeting minutes said.

“A higher cash rate may also be necessary, even with continued weakness in aggregate demand, if other factors slow the pace of disinflation,” the RBA said in its minutes.

Policymakers reiterated that returning inflation to the 2-3% target range remains their top priority.

He added that the target could be achieved in the second half of 2025 and mid-2026. Meanwhile, unemployment is expected to be around the level consistent with the committee’s full employment mandate by mid-2025.

The S&P/ASX 200 index fell 0.14% to around 7,852.9 on Tuesday, giving up some gains from the previous session.

ETF: (EWA), (FXA), (FLAU).