The central bank said it was committed to doing “whatever it takes to get inflation back on target” but stressed that it is “still trying to navigate the narrow path.”
“Members agreed that further interest rate increases may still be required, but this would depend on how the economy and inflation evolve,” the minutes, released today, read.
The decision to raise rates in May, after a pause in April, ultimately stemmed from fears of new inflation risks due to weak productivity growth, as well as faster-than-expected rent increases.
“In reaching their decision, members recognized that there were still significant uncertainties surrounding the economic outlook, particularly for household consumption,” the minutes said.
“But overall, given the Board’s strong commitment to price stability and the importance of ensuring inflation expectations remain anchored, members felt a further increase in interest rates was warranted.”
The RBA said that “in weighing the two options”, the board acknowledged that “the arguments were finely balanced” but considered it “appropriate to raise interest rates at this meeting”.
“Information available during the previous month had confirmed that the labor market remained tight and that inflationary pressures were significant,” the minutes said.
“That information also pointed to upside risks to the inflation outlook.
“If these risks were to materialize, they would further delay the return of inflation to target, with the prospect of a detrimental shift in inflation expectations.
“In addition, members noted that the forecasts presented at the meeting were based on a technical assumption for the path of the cash rate that implied a further increase.”