The Reserve Bank of Australia’s September minutes pointed to inflation risks on the upside, with some of those pressures already unfolding since August and liaison feedback pointing to broad domestic cost pressures, including unit labour costs. Members debated whether financial conditions were only modestly restrictive, although models based on the neutral rate still implied policy was somewhat restrictive and suggested the neutral rate itself may have risen. House prices fell more than expected, a move the board read as evidence that conditions could be quite tight, while domestic spending was framed as needing to stay muted for a period to return inflation to target. The minutes also flagged emerging tech-driven price pressures linked to the AI boom and advised treating jobs data with considerable caution due to survey changes.
Externally, the RBA cited a worsening Middle East clash that has pushed oil prices above expected levels, and warned that higher overseas rates could transmit to Australia through the currency channel. It said an increase in the global neutral rate could weigh on the Australian dollar if domestic rates remain flat, while overseas rate rises might also ease domestic financial conditions via a weaker currency. In markets, AUD/USD was 0.13% lower on the day at 0.6950. The RBA reiterated its mandate for 2–3% inflation and noted it holds 11 policy meetings a year.
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