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.
The Reserve Bank of Australia's August minutes revealed a less hawkish tone compared to the June meeting, but still highlighted potential upside inflation risks and the option of preemptive tightening. With July CPI being strong, more data is expected before the September meeting, leaving the RBA with a decision to make - act early or wait for additional Q3 inflation readings.
The Bank's August Statement and minutes emphasized the possibility of preemptive rate hikes if inflation forecasts were found to be significantly biased towards the upside. Today’s CPI data strengthens the conversation around a potential RBA hike by the end of the year, potentially as soon as next month. As the September meeting approaches, the on-hold call for a rate hike appears increasingly untenable.
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