RBA Board Meeting Minutes

The RBA has given us a further hint that a pause in the rate hike process is on the way. How long that pause will last is anyone's guess but it's a pretty safe bet that unless Europe collapses and China stops buying our minerals there will be further rate hikes towards the end of the year. I've pasted their conclusions below. If you wish to read the minutes follow this link. RBA Minutes
Members noted that the increases in interest rates to date had been timely. There were some early signs that they were beginning to affect behaviour, with retail sales subdued and housing loan approvals falling noticeably. Nonetheless, the stimulatory effects of the resources boom would be building over the year ahead. Members were conscious of the need for this not to result in a material worsening in the medium-term outlook for inflation. This was weighed against the case that could be made for a pause in the process of normalising interest rates owing to the uncertainty in the euro area. On balance, members judged it to be prudent to undertake some further monetary tightening at this meeting. They noted that, if lenders responded as expected to another rise in the cash rate, interest rates faced by most borrowers would then be at around their average levels over the past decade. Members felt that this would leave monetary policy well placed for the present. The Board therefore supported another rise in the cash rate.

The Decision

The Board decided to raise the cash rate by 0.25 percentage points to 4.5 per cent, effective 5 May.