Minutes from the December meeting of the Reserve Bank reveal the possibility of additional interest rate hikes, triggering accusations from the Coalition that the government is not sufficiently contributing to combat inflation.
Published on Tuesday, the minutes state that although the RBA has decided to maintain rates at 4.35 percent this month, board members acknowledge the potential need for further measures in the upcoming months.
“Members agreed that whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend on how the incoming data alter the economic outlook and the evolving assessment of risks,” the minutes read.
This revelation may be concerning for families already grappling with significant cost-of-living pressures and could surprise markets, which had generally assumed that the RBA had concluded its tightening cycle. Despite current market pricing suggesting a one-in-four chance of a rate cut in March and nearly 100 percent odds for a cut in June, the RBA has left open the possibility of at least one more rate hike in the coming year. Continued economic resilience could also lead the bank to maintain higher rates for an extended period.