The Reserve Bank of Australia (RBA) published the minutes of its May monetary policy meeting on Tuesday, highlighting that board members had considered raising interest rates and found the case for indefinite policy to be stronger. According to Reuters, additional details of the RBA minutes suggest that the board agreed that it is challenging to determine or rule out future changes to the interest rate.

Key conclusions

“It was considered whether to raise interest rates, it was concluded that the stronger policy favors a stable policy.”

“The board agreed that it is difficult to rule in or rule out future changes to the interest rate.”

“The flow of data has increased the risk that inflation will remain above target for longer.”

“The board expressed limited tolerance for inflation returning to target after 2026.”

“Staff forecasts were considered reasonable and presented a credible path back to target.”

“The board noted that the forecasts were based on a noticeably higher interest rate path.”

“A rate hike could be appropriate if forecasts turn out to be too optimistic.”

“The risks associated with the forecasts were assessed to be sustainable.”

“Importantly, inflation expectations remained well anchored.”

“It is prudent to check short-term fluctuations in inflation to avoid ‘over-tuning.’”

“The labor market turned out to be tighter than expected and consumer demand was weaker.”

“Financial conditions in Australia were considered restrictive.”

“The risks to global growth have become more balanced, and the outlook for the United States and China has been revised upwards.”

Market reaction

At the time of writing, AUD/USD is trading near the 0.6669 level, remaining bullish, adding 0.04% on the day.