Australia's Central Bank: Being Prepared to Act as Economic Outlook Improves

Forex - The Reserve Bank of Australia (RBA) has stated that there is no immediate need to change interest rates, which have been held steady for a year. The minutes released today from the board meeting held on November 4-5 indicate that the RBA is revisiting the scenarios of lowering the cash rate, currently at 4%, or keeping it stable for an extended period.

In such a scenario, the RBA noted that a significant slowdown in inflation might necessitate a rate cut, but the board must observe multiple strong quarterly inflation outcomes to ensure that such a decrease is sustainable.

Markets have not fully priced in a rate cut until May of next year, with only a 38% chance of a cut occurring in February after the fourth-quarter inflation report. However, the majority of economists still expect a rate cut in February.

The central bank has evaluated a range of scenarios that may require a timely policy response. The RBA emphasized, "It is important to stay forward-looking and avoid being overly reliant on backward-looking data, which could lead the board to react too late to changing economic conditions."