Monetary Policy Board minute cites tight labour conditions, upside inflation risks
The Reserve Bank of Australia (RBA) struck a “more hawkish” tone in the minutes of its November board meeting, signalling a cautious stance on future interest rate movements despite recent economic softening.
According to ANZ analyst Adelaide Timbrell, while the post-meeting statement earlier this month appeared relatively balanced, the minutes revealed more concern about upside risks to inflation and demand.
The RBA Board acknowledged uncertainty around how restrictive current policy settings are but ultimately determined that financial conditions in their current state remain “slightly restrictive”.
Importantly, the Board explored scenarios that could warrant either holding or reducing the cash rate.
On the hold side, the Board flagged that stronger-than-expected global growth or a rebound in household income and spending could warrant keeping rates on hold.
Labor market still tight
Timbrell noted a shift in the Board's evaluation of labour market conditions.
While indicators suggest some softening – such as muted employment growth in the market sector – the Board still described the market as “a little tight”.
That is despite the jobless rate jobless rate rising to 4.5% in September, marking its highest level since 2021
But forward-looking indicators and forecasts support a broadly stable unemployment rate, adding to the argument for a cautious approach.
That said, the Board acknowledged downside risks to consumer spending and employment, which could justify future easing.
It also considered an alternate inflation scenario showing a more favourable outcome with no further rate cuts, contrasting the current market pricing of around 30 basis points in easing.
Despite the more hawkish tone, market expectations for the cash rate trajectory remain largely unchanged.
ANZ continues to forecast a final 25-basis-point rate cut in the first half of 2026, with February as the most likely timing.
