Investing.com-- The Reserve Bank of Australia had considered raising interest rates in June in the face of stickier-than-expected inflation, the minutes of the June meeting showed on Tuesday, with the bank seeing an increasingly narrower path to stability.
The RBA had kept its official cash rate at 4.35%, but had offered a more hawkish stance than markets were expecting, citing increased concerns over high inflation.
Consumer price index inflation read higher than expected for three consecutive months, with core inflation remaining well above the RBA’s 2% to 3% annual target. This notion was a key consideration for the RBA in potentially raising interest rates further.
Still, the central bank kept rates steady in June, with the minutes of its meeting showing that the RBA still did not see a major change in its forecast for inflation easing within its target range by 2026.
“Members (of the RBA board) also affirmed their assessment that it was still possible to achieve the Board’s strategy of returning inflation to target in a reasonable timeframe without moving away significantly from full employment, even though this ‘narrow path’ was becoming narrower,” the minutes showed.
The board said it still remained on guard over more potential upsides in inflation, and that the Australian economy still remained relatively resilient, despite recent signs of cooling.
UBS analysts said more signs of sticky inflation and labor market strength could see the RBA raise interest rates by August, and that the bank was now expected to cut rates in April 2025, instead of February.