Australia’s Reserve Bank has raised its cash rate by 25 basis points to 3.85 per cent this month. The move addressed stubborn inflation risks, reversing one of three 2025 cuts.
Minutes from Tuesday’s release show board members noted a sharp change in threats to inflation and jobs targets.
“Members agreed that the data received since the previous meeting had strengthened their concern that, without a policy response, inflation would remain persistently above target for too long.”
Robust demand surprised to the upside, with house prices and lending accelerating.
Unemployment fell to 4.1 per cent in December, easing job worries, while global growth beat forecasts thanks to AI investments.
Analysts expect Q1 core inflation near 3.4 per cent in late April data. RBA forecasts 3.7 per cent mid-year, easing to 3.2 per cent by Christmas.
The board sees balanced risks and data will guide ahead. “Members agreed that the prevailing uncertainties meant it was not possible to have a high degree of confidence in any particular path for the cash rate.”
Markets bet on a May hike to 4.10 per cent if pressures persist. Officials aim to tame inflation while holding employment gains.