No other option aside from keeping interest rates on hold was formally entertained at the Reserve Bank of Australia’s last interest rate meeting.

The decision to leave interest rates untouched at 4.35 per cent was widely expected at the meeting held over two days last month.

While the board did discuss the case for lifting interest rates at the February meeting – where a hold was also widely anticipated – such a deliberation was absent in the minutes from the March talks.

There was also no talk of interest rate cuts.

In the minutes, members stressed the latest economic data had come in broadly as expected and had not “materially changed” their views on the outlook.

“They decided to emphasise that the data indicated the economy was tracking broadly as expected and that while there were significant uncertainties, the risks seemed broadly balanced,” the minutes stated.

The board also reiterated its flexible stance on future interest rate movements already communicated in the post-meeting statement.

“Members agreed that it was therefore not possible to either rule in or out future changes in the cash rate target,” they said.

Members did dissect risks to the outlook, including if inflation stayed high as “productivity growth did not increase sustainably or if services price inflation proved stickier than assumed”.

On the other hand, consumers could remain cautious and risk a bigger economic slowdown than expected.

“In particular, the recovery in real household disposable income growth may not lift consumption growth if households do not respond as expected, perhaps because of a weakening in the labour market,” the minutes read.

“On balance, members considered that the relative probability of these two sets of risks had become a little more even, as the incoming data had not indicated a materialisation of upside risks to inflation and as growth in output had slowed as expected.”

Poppy Johnston
(Australian Associated Press)