RBA Eyes Rate Hike as Inflation Risks Mount

The Reserve Bank of Australia (RBA) is still considering raising interest rates to combat inflation risks, according to minutes from its August meeting. Despite leaving the cash rate unchanged at 4.35 per cent, the RBA board expressed concerns about a slower pick-up in productivity growth and higher business cost pressures.

The board noted that if the inflation forecast is skewed to the upside, it may be necessary to tighten monetary policy pre-emptively. This could happen if the Middle East conflict drags on or the AI boom is larger than anticipated.

ANZ senior rates strategist Jack Chambers described the minutes as 'slightly hawkish', with more focus on upside inflation risks and less emphasis on activity slowdown.