Unsealed minutes will detail RBA’s thinking on rate hikes and the current pause

The RBA board has given itself time to consider the effect of its actions to reduce inflation, Michael Pascoe writes.

The RBA board has given itself time to consider the effect of its actions to reduce inflation, Michael Pascoe writes. Photo: TND

More light will be shed on the Reserve Bank of Australia’s decision to forego a further interest-rate hike when the minutes of the most recent board meeting are released this week.

The summary of the April board meeting, which came after 10 hikes in a row due, will help to background what most economists agreed was a close call between another hike and a pause.

The glimpse into the last meeting follows a couple of public appearances from senior RBA officials, including Governor Philip Lowe at the National Press Club, where he said the bank decided to keep rates on hold to let the 350 basis points of hikes delivered so far flow through the economy.

But since then, ANZ economists Adam Boyton, Felicity Emmett, Catherine Birch, Adelaide Timbrell and Madeline Dunk said several data sources have pointed to “resilience and green shoots” in the economy.

For the RBA, which has been hiking interest rates to take heat out of the economy and cool too-high inflation, the signs of strength could be concerning.

‘More about patience than resilience’

However, the ANZ economists said the surprisingly strong employment report, ongoing strength in the business sector and improving confidence in the property market would not be enough to prompt the bank to move again in May.

“For the RBA, it’s more about patience than resilience,” Mr Boyton and his colleagues wrote in a report, noting that one month of pausing would not be enough time to observe the effects of the increases so far.

The team does expect a final 25bp hike in August, however, due to likely stickiness in inflation and stronger wage growth.

Other items to watch this week include ANZ and Roy Morgan’s weekly consumer confidence index, due on Tuesday, and Westpac-Melbourne Institute’s leading index, set to be released on Wednesday.

The leading index, which indicates the likely pace of economic activity relative to trend over the next three to nine months, has been in negative territory for seven months in a row.

On Friday, the ‘flash’ purchasing managers’ indexes are due for April, which will offer a timely measure of activity in the services and manufacturing sectors.


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