RBA Flags Inflation Risks Despite Policy Hold: August Meeting Minutes

2026-08-25 01:53 By Farida Husna 1 min. read

Australia’s inflation has eased from its March peak, with underlying price growth slightly lower than in late 2025, the Reserve Bank's August minutes showed.

However, board members judged inflation “too high” and excess demand persistent.

Meanwhile, financial conditions were seen as somewhat restrictive after earlier hikes.

Staff projected inflation would only gradually return to target by late 2027, with risks skewed upward.

Arguments for a 25-bp hike cited upside risks: Middle East conflict driving oil prices, firms passing costs more fully, stronger AI/data-center investment, resilient demand, and weak productivity.

The case for holding steady rested on signs policy was already restrictive, inflation slightly below forecast, and unemployment rising.

Downside risks included faster labor easing, weaker demand, and housing drag.

Ultimately, policymakers left rates unchanged but reaffirmed readiness to act if upside risks materialise.



News Stream
RBA Flags Inflation Risks Despite Policy Hold: August Meeting Minutes
Australia’s inflation has eased from its March peak, with underlying price growth slightly lower than in late 2025, the Reserve Bank's August minutes showed. However, board members judged inflation “too high” and excess demand persistent. Meanwhile, financial conditions were seen as somewhat restrictive after earlier hikes. Staff projected inflation would only gradually return to target by late 2027, with risks skewed upward. Arguments for a 25-bp hike cited upside risks: Middle East conflict driving oil prices, firms passing costs more fully, stronger AI/data-center investment, resilient demand, and weak productivity. The case for holding steady rested on signs policy was already restrictive, inflation slightly below forecast, and unemployment rising. Downside risks included faster labor easing, weaker demand, and housing drag. Ultimately, policymakers left rates unchanged but reaffirmed readiness to act if upside risks materialise.
2026-08-25
RBA Flags Inflation Risks, Keeps Hike Option Open
The Reserve Bank of Australia (RBA) will need to raise interest rates again if upside risks to inflation materialize, Deputy Governor Andrew Hauser warned in a Wednesday speech. He said inflation remains “too high” and highlighted three key risks: the Middle East conflict, the global AI boom, and weak productivity. The central bank has already lifted rates by 75 basis points since the start of the year to curb stubborn price pressures, but held steady at 4.35% for a second consecutive meeting last week. Hauser’s remarks underscore the Bank’s readiness to act further should these risks intensify, keeping policy firmly focused on restraining inflation.
2026-08-19
Monetary Policy Remains Restrictive, Tightening Working: RBA Kent
Monetary policy in Australia remains “somewhat restrictive,” with earlier tightening continuing to weigh on demand and inflation, Reserve Bank Assistant Governor Christopher Kent said in a speech. He highlighted rising borrowing costs and mortgage payments, a softer housing market, and year-to-date appreciation of the Australian dollar as signs that aggregate demand growth is slowing. Kent stressed this moderation is “intended and needed” to return inflation to target. While estimates of the nominal neutral rate are imprecise, they suggest the current stance is restrictive. Yet financial conditions reflect more than policy alone: housing has weakened more than rate increases imply, amplifying restraint, while resilient global demand tied to AI investment and higher overseas yields could offset it. The central bank will continue weighing these cross-currents as it refines its outlook and guides future decisions.
2026-08-13