Reserve Bank of Australia November monetary policy meeting minutes. The headline to this post is a snippet comment but it shows the RBA is keeping its options open.
Statement etc, is here from the day of the meeting:
more to come
Headlines via Reuters:
- Spending might be slowed by inflation . Interest rates, falling house prices
- Data suggest Q3 GDP was solid, household spending likely rose real 1.5% q/q
- Important to avoid a price-wage spiral, board will be watching behaviour closely
- Medium term inflation expectations, wages consistent with inflation returning to 2-3% target
- Board noted easing in global supply chains. Tightening by other central banks
- Rates not on pre-set path, board resolute in returning inflation to target
- Board did not rule out returning to larger hikes, or pausing for a period
- Board saw value in being consistent with policy after hiking by 25bp in October
- Hikes having a clear impact on housing prices, have had a large effect on consumer spending in the past
- Chose 25bp given rates had already risen significantly, full effects yet to be felt
- Considered whether to hike rates by 25bp or 50bp, saw arguments in favour of both
- Board expects to increase interest rates further over the period ahead
- Stronger guidance will be considered when rates near the lower bound
- Board will not publish its own forecasts of the expected path for rates
- Forward guidance on interest rates will not always be provided
- Guidance will focus on unemployment, inflation objectives rather than drivers such as wages
- Board decided future guidance will be qualitative in nature, flexible and conditional
- Time-based guidance had not been well suited to unprecedented global events
- Time-based guidance attracted extensive criticism when rates were raised earlier than projected
- Review of forward guidance found substantial communication challenges
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On that "Time-based guidance attracted extensive criticism when rates were raised earlier than projected". Yes. The RBA really stuffed up when it stuck to its '2024' forecast for raising rates even in the face of surging inflation. The Bank first hiked in May of 2022, not in 2024. Some of us scoffed at this 2024 guidance when it was first made, back in February of 2021
Overconfidence, perhaps even arrogance?, is not a useful quality to cultivate as a trader, or as a central banker.
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Full text:
Minutes of the November 2022 Monetary Policy Meeting of the Reserve Bank Board
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Reserve Bank of Australia Governor Lowe