The Reserve Bank of Australia’s September meeting minutes showed board members only briefly considered leaving rates unchanged before unanimously raising the cash rate by 25 basis points to 4.60%. Members judged that several upside inflation risks had materialised or were building. They also left open the possibility of further increases if required.
The minutes, released on October 13, provide the board’s reasoning after the rate decision had already been announced on September 29. Members cited stronger-than-expected domestic capacity pressure, higher global energy costs and price effects linked to the artificial-intelligence investment boom. They judged financial conditions restrictive, but possibly only modestly so.
BOARD SAW UPSIDE RISKS MATERIALISING
Members said July’s underlying inflation surprise was more consistent with tighter domestic capacity than with direct pass-through from the Middle East conflict. Unit labour costs remained above levels consistent with the inflation target because productivity growth was subdued. Business contacts were also reporting broad cost pressure and an intention to pass it into prices.
International developments reinforced that assessment. Oil prices were substantially above assumptions used in the August forecasts, while strong demand for AI-related products was lifting activity and prices across important Asian trading partners. The board concluded that waiting for more confirmation could prove costly if business inflation expectations continued to rise.
TERM REPO AUCTIONS ADD LIQUIDITY TOOL
The board separately endorsed regular Term Repo Operations to provide liquidity at longer maturities alongside the RBA’s existing facilities. The minutes say the tool is expected to become operational in 2027. The central bank has since published a technical note with further design information.
The minutes distinguish the new disclosure from the earlier rate announcement by detailing the board’s risk assessment and liquidity-framework decision. The next policy meeting is scheduled for November 3 and 4, when updated data will determine whether the board acts again, while implementation work on the term repo facility continues toward 2027.