RBA Minutes from Dec Meeting: members considered whether to raise the cash rate target by a further 25 basis points or to hold the cash rate target steady; board noted RBA staff forecast had inflation returning to the top of the band by the end of 2025

• Board considered whether to raise rates by 25BP or hold steady.
• RBA decided the case for steady rates was the stronger one at this meeting.
• The board saw "encouraging signs" of progress on inflation, and this needed to continue.
• Whether further tightening is required would be decided by data and assessment of risks.
• Recent data had not warranted a material change to the economic outlook.
• The board saw value in waiting for more data to assess the balance of risks.
• The risk of inflation could stay high too long balanced by the risk of a sharper slowdown in demand.
• Liaison with firms showed they expected price increases to moderate in the year ahead.
• Consumption growth is quite weak, with many households facing a painful squeeze on finances.
• However, domestic demand is still running ahead of supply, and inflation is above several other countries.
• The board noted RBA staff forecast had inflation returning to the top of the band by the end of 2025 rather than the midpoint.
• The board discussed RBA plans for government bond holdings and agreed for now to keep them to maturity.
• The board will continue "active consideration" of whether to sell bonds before maturity.
• They discussed whether it's best to sell bonds to the market or to the government's AOFM.
• Judged that selling bonds to AOFM would have several practical benefits.

Via RBA