The Reserve Bank of Australia released minutes from its August meeting showing debate among the nine board members, who were split into two camps before unanimously deciding to keep the policy rate at 4.35% to await further economic data. One side argued that a rate hike might be needed to curb inflation risks that could rebound from Middle East conflict and global crude oil prices, while the other side viewed the current rate as sufficiently tight and saw time to wait for economic developments. The board identified key risks that could push inflation higher, including the global investment wave in AI and data centres, weak labour productivity, and Middle East tensions, with Brent crude jumping to 92 dollars a barrel after the United States expanded sanctions on Iran. Financial markets price only a 13% chance that the RBA will raise rates to 4.60% at its next meeting, but reflect a 67% probability of a hike by February next year.
RBA minutes indicate possible future rate hikes, supporting higher Australian yields.
