Reserve Bank of Australia: Preemptive hike debate intensifies – TD Securities

Prashant Newnaha at TD Securities notes that the RBA’s August minutes were overall less hawkish than June, but still emphasized upside inflation risks and the possibility of preemptive tightening. With July CPI strong and further data due before the September meeting, he underscores that the Board faces a choice between acting early or waiting for more comprehensive Q3 inflation readings.

Board weighs preemptive tightening

"Our interpretation of the RBA's August Statement and Minutes were overall less hawkish than the communication at the Bank's June meeting."

"That said, the hawkish element in the August minutes was the discussion around the Bank possibly acting preemptively and hiking."

""Members noted that if the risks around the inflation forecast were judged to be significantly skewed to the upside, it may be appropriate to mitigate those risks somewhat by tightening monetary policy pre-emptively.""

"Today's CPI outcome certainly adds weight to the discussion around the potential for the RBA delivering a hike by year-end and possibly as early as next month."

"We concede today's CPI release lines up the Sep RBA Board meeting as live, with the Nov meeting as the next likely month the RBA potentially hikes. Our on-hold call is looking less tenable."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)