The Reserve Bank of Australia (RBA) board considered increasing interest rates earlier this month but ultimately decided to keep the cash rate steady, according to the minutes of their latest meeting.
Despite higher-than-expected inflation in the first quarter, the Consumer Price Index (CPI) continues to trend downward.
The minutes noted, “Inflation was still declining towards the target, and the recent information did not materially alter its trajectory.”
The board discussed the potential benefits of maintaining the current cash rate, highlighting concerns about the labour market’s proximity to full employment.
“Holding the cash rate steady could be an appropriate way to mitigate the risk that the labour market is already close to full employment, which would bring inflation back to target somewhat sooner than envisaged,” the minutes stated.
This decision underscores the RBA’s cautious approach as it navigates the complexities of inflation management and employment stability.
