The RBA considered a rate hike during its August meeting, minutes show By Investing.com

Investing.com– The Reserve Bank of Australia considered raising interest rates in early August, minutes of its recent meeting showed, amid lingering concerns that inflation will remain sticky for longer.

But the central bank set a hold, keeping it unchanged at 4.35%.

Members of the central bank’s rate-setting committee noted that the risk of inflation falling short of the RBA’s annual target of 2% to 3% by the end of 2025 had “increased significantly”, the minutes said.

There have also been growing doubts about whether current monetary conditions are tight enough to return to the RBA’s target. These concerns have led policymakers to consider a potential increase.

Governor Michele Bullock, speaking after the meeting, also warned that the RBA could raise rates in the face of sticky inflation.

But while core inflation remained well above the central bank’s target, a reading for the June quarter showed some easing in inflation across the board.

Policymakers also decided to leave rates unchanged to “balance risks to both inflation and the labor market.”

Australia’s labor market has run wild in recent months, posing a higher risk to inflation. This trend also gives the RBA more impetus to potentially raise rates further.

Policymakers were uncertain about how the RBA would move rates in the coming months and that “it was neither possible to rule in nor rule out future changes to the cash rate target”.

Analysts expect the RBA to keep rates on hold until at least the first quarter of 2025 and start cutting rates later in the year.