Reply To: RBA Raises Rates to Nine Year High 2.85%


Reserve Bank of Australia November monetary policy meeting minutes.

Headlines via Reuters:

Spending might be slowed by inflation. Interest rates, falling house prices
Data suggest Q3 GDP was solid, household spending likely rose real 1.5% q/q
Important to avoid a price-wage spiral, board will be watching behaviour closely
Medium term inflation expectations, wages consistent with inflation returning to 2-3% target
Board noted easing in global supply chains. Tightening by other central banks
Rates not on pre-set path, board resolute in returning inflation to target
Board did not rule out returning to larger hikes, or pausing for a period
Board saw value in being consistent with policy after hiking by 25bp in October
Hikes having a clear impact on housing prices, have had a large effect on consumer spending in the past
Chose 25bp given rates had already risen significantly, full effects yet to be felt
Considered whether to hike rates by 25bp or 50bp, saw arguments in favour of both
Board expects to increase interest rates further over the period ahead
Stronger guidance will be considered when rates near the lower bound
Board will not publish its own forecasts of the expected path for rates
Forward guidance on interest rates will not always be provided
Guidance will focus on unemployment, inflation objectives rather than drivers such as wages
Board decided future guidance will be qualitative in nature, flexible and conditional
Time-based guidance had not been well suited to unprecedented global events
Time-based guidance attracted extensive criticism when rates were raised earlier than projected
Review of forward guidance found substantial communication challenges