RBA Policymakers Split on Rate Hikes Amid Inflation Concerns

The Reserve Bank of Australia's (RBA) August meeting minutes revealed a split among policymakers on whether to raise interest rates. While some members were concerned about stubborn inflation, others argued that policy was already restrictive and that waiting for price pressures to reaccelerate would be prudent.

The RBA flagged several cross-currents in the outlook, including geopolitical events that could lift energy costs, heavy investment in AI and data centers that could keep demand firm, and weak productivity that can make inflation harder to squeeze out.

Despite these concerns, the RBA emphasized its desire for 'more information' before making a decision, citing upcoming monthly inflation and labor-market releases as key indicators. Markets currently price only about 13% chance of a move to 4.6% at the September 28-29 meeting, rising to roughly 67% by February next year.