The Reserve Bank of Australia decided to keep the cash rate target unchanged at 3.6%, adopting a cautious and data-dependent approach amid mixed global policy trends, persistent inflationary pressures, and a resilient domestic economy, minutes from its September meeting showed on Tuesday.
The central bank noted that advanced economies are diverging in their policy approaches, with the US, Canada, and New Zealand easing rates due to labor market weakness, while the UK, euro area, and Japan lean toward tighter policies amid contrasting signals from global bond markets and robust corporate funding conditions.
In Australia, the dollar edged higher, supported by widening yield differentials, while its real trade-weighted value remained near equilibrium, which suggests the modest appreciation has not further tightened financial conditions beyond the impact of current interest rates.
The board observed that the August cash rate cut eased financial conditions domestically, with lower funding and lending costs supporting a transmission consistent with previous easing phases.
The board shared that economic conditions showed stronger-than-expected growth driven by household consumption and a gradual shift from public to private sector demand, alongside persistent inflationary pressures and tight labor markets.
The members suggested closely monitoring incoming data on inflation and labor dynamics while maintaining a cautious approach to monetary policy to support sustainable growth.
The committee noted that Australia's financial system remains resilient and well-positioned to withstand most domestic and international shocks, with no immediate changes to monetary policy necessary.
Members emphasized the importance of maintaining sound lending standards and strengthening system resilience through macroprudential measures and coordinated efforts to address emerging risks such as cyber threats and geopolitical uncertainties.
The board decided to keep the cash rate unchanged, reflecting a balanced outlook on inflation and the labor market.
The bank committed to a cautious, data-dependent approach going forward, closely monitoring global and domestic economic conditions to ensure price stability and full employment.