In the minutes from its September meeting, the Reserve Bank of Australia (RBA) board discussed various scenarios for adjusting interest rates, including lowering, holding, or raising them in light of significant economic uncertainty.
Board members expressed that not enough had changed since previous meetings, indicating that the current cash rate effectively balances risks to inflation and the labour market.
They acknowledged that future financial conditions might need to be adjusted to meet the board's objectives.
The board noted that policy could remain restrictive if consumption growth increases significantly, while tightening might be necessary if current financial conditions do not sufficiently curb inflation.
Conversely, easing may be warranted if the economy weakens more than expected. The RBA emphasised that the cash rate does not need to align with policy rates in other economies.
While remaining vigilant to upside risks to inflation, the board acknowledged that underlying inflation remains too high and that the outlook for Australia's exports has shifted negatively since the last meeting. Although many households continue to experience financial pressures, a small percentage are unable to service loans.
The RBA stated that its policy would need to stay restrictive until members are confident inflation is sustainably moving toward the target range.