RBA Minutes: Upside inflation risks have diminished

The Reserve Bank of Australia (RBA) published the Minutes of its December monetary policy meeting on Tuesday, highlighting that the board had gained confidence in inflation since the prior meeting, but risks remained. Policy needed to be "sufficiently restrictive" until confident about inflation.

Key quotes

Policy needed to be "sufficiently restrictive" until confident about inflation.
The board had minimal tolerance for inflation remaining above target for too long.
The board had gained confidence in inflation since the prior meeting, but risks remained.
Future data in line or weaker than forecast would give more confidence on inflation.
It would then be appropriate to begin relaxing the degree of policy tightness.
If data proved stronger, it could mean a longer period before easing.
The board saw signs policy was not as restrictive as the level of the cash rate would suggest.
The labor market was resilient, and service inflation was more persistent.
Wages had slowed more than expected, which could mean the labor market was not as tight as thought.
Monthly CPI suggested a modest downside risk to Q4 inflation forecasts.
Upside inflation risks had diminished, and downside risks to activity had grown.
The board noted more data and updated forecasts would be available by the February meeting.
It was not possible to judge the impact on Australia of Trump policies until more is known. 

Market reaction to the RBA Meeting Minutes

At the time of writing, AUD/USD is trading 0.15% lower on the day to trade at 0.6240.