The minutes of the September policy meeting read mixed, with hawkish tones but this line seems to indicate the Bank really thinks the rate hike cycle is over:
- The recent flow of data was consistent with inflation returning to target within a reasonable timeframe while the cash rate remained at its present level. Members recognised the value of allowing more time to see the full effects of the tightening of monetary policy since May 2022, given the lags in the transmission of policy through the economy.
The full text is here:
If the Bank backs away too much from a hawkish bias the Australian dollar could well come under further downward pressure. A lower AUD would feed through to higher import prices, which would in turn feed through to higher inflation. This is not something the Reserve Bank of Australia want to see. But, that bolded remark above seems to let the cat out of the bag regarding the end of the hiking path. The next critical data point is the quarterly inflation data due from the Australian Bureau of Statistics on October 25. Until we get that data point the November RBA meeting is best though of as a 'live' meeting. We'll make a better assessment after the inflation data.
AUD/USD update:
