RBA Eyes Another Rate Hike Amid Inflation Concerns

The Reserve Bank of Australia (RBA) is still considering a rate hike to combat potential inflationary pressures, according to minutes from its August meeting. The RBA board noted that several members believed it was possible for upside risks to inflation forecasts to crystallize, requiring further tightening.

These risks include a slower pick-up in productivity growth than expected, higher pass-through of business cost pressures to consumers, or a more resilient domestic economy. The board decided to leave the cash rate unchanged at 4.35% due to lower-than-forecast inflation and a softening jobs market.

ANZ senior rates strategist Jack Chambers described the minutes as 'hawkish,' with a focus on upside inflation risks rather than activity slowdown. He noted that while there may not be enough new information for these risks to materialize by September, the November meeting remains a possibility.