Westpac on the dovish Reserve Bank of Australia minutes released yesterday, this in brief:

  • The key section of the Minutes contains a new dimension to the discussion on policy. The advantage of hiking by 25 basis points at the November meeting after having scaled back to 25 basis points in October is “acting consistently would support confidence in the monetary policy framework among financial market participants and the community more broadly.”
  • That approach would seem to be somewhat inconsistent with the assertion that has appeared in these and previous Minutes, “The size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.”


FWIW, I think its difficult to disagree with WPAC's incredulity here. Just prior to the November RBA meeting we had the most recent official inflation report released, for the the September quarter:

  • underlying inflation lifted by 1.8% in the September quarter alone
  • and also showed a significant broadening of inflation pressure (just under 80% of components rose 3% or more over the year)

The RBA dropped the ball by ignoring inflation prior to its May 2022 lift-off rate hike. It looks to be doing so again.

rba cycle cash rate 01 November 2022