- Prior 3.60%
- Policy decision was unanimous
- The decline in underlying inflation has slowed
- Recent data, while partial and volatile, suggest that inflation in the September quarter may be higher than expected at the time of the August SOMP
- Domestic economic activity is recovering but the outlook remains uncertain
- Private consumption is picking up as real household incomes rise and measures of financial conditions ease
- Various indicators suggest that labour market conditions have been broadly steady in recent months
- Labour market conditions remain a little tight
- Uncertainty in the global economy remains elevated
- Extreme outcomes on US tariffs are likely to be avoided
- But trade policy developments are nevertheless still expected to have an adverse effect
- It was appropriate to maintain the cash rate at its current level amid signs that private demand is recovering, persistent inflation in some areas and labour market conditions overall remaining stable
- It was appropriate to remain cautious, updating its view of the outlook as the data evolve
- Will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions
- It will take some time to see the full effects of earlier cash rate reductions
- Maintaining price stability and full employment is the priority
- Full statement
The RBA is sticking with optionality and flexibility, and this decision here fully visualises that. The key takeaway is the change on their inflation view. Previously, they said that "inflation has continued to moderate". Now, they're saying that "the decline in underlying inflation has slowed". That's a notable change, one leaning towards the hawkish side.
Besides that, there's some subtle changes - although relatively minor - in the forward guidance passage. And they are all to reflect the pause mode, one that could persist for longer if ongoing developments stay the course. The part on perhaps wanting to allow some time for the full impact of earlier rate cuts to be seen pretty much exemplifies that.
AUD/USD is marked slightly higher to 0.6595 currently, up from around 0.6585 earlier before the decision. It's nothing overly hawkish from the RBA but it reinforces the notion that they're not necessarily cornered into just having to keep cutting rates. Or so at least that is the language and communique that they're trying to sell. In other words, pausing for longer remains an option.
