Reserve Bank to spell out why it delivered rates pain
The logic behind the Central Bank’s increase in interest rates for the first time in more than two years will be revealed in full detail.
The central bank will on Tuesday release the minutes of its last meeting in early February, when the board decided to raise the official cash rate by 25 basis points to 3.85 percent.
The Central Bank increased interest rates for the first time since November 2023, tracking an increase in inflation above the target range of two to three percent.
The minutes are expected to shed more light on the factors that led to the call, with Central Bank governor Michele Bullock having since been questioned about the board’s decision at a press conference and two parliamentary hearings.
AMP chief economist Shane Oliver said the minutes could support the message that more rate hikes were on the way.
“The minutes of the last RBA meeting are likely to strengthen the RBA’s hawkish stance and offer further warning that it will raise interest rates again if inflation data do not improve sufficiently,” he said.
The board has previously said inflationary pressures increased in the second half of 2025 and will likely continue through 2026.
“Although part of the rebound in inflation is considered to reflect temporary factors, it is clear that private demand is growing faster than expected, capacity pressures are greater than previously anticipated, and labor market conditions remain somewhat tight,” the board said.
Ms Bullock has previously said a resurgence in inflation had forced the bank’s hand, while the pace of consumer spending and business investment had caught the board off guard.
A statement from the bank’s currency board at the time of the interest rate decision warned of uncertainties regarding domestic policy.
“On the domestic side, if growth in demand is stronger than expected and growth in the economy’s supply capacity remains limited, this is likely to further increase capacity pressures,” the statement said.
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