The Minutes point to a “dovish tilt” to policy where rate hikes in the period ahead are “expected” rather than “likely” and, for the first time, a possible pause has been noted.
That does not put the December move of 25 basis points in any doubt but markets will be encouraged to speculate on further downward pressure on the terminal rate.
However, rising and broadening inflation; likely boosts to wages growth; tight labour markets; and the huge risk that this “flirting” with easy policy can risk boosting inflation psychology still point to the need for the Board to stay the course (in our view, a terminal rate of 3.85% by May) to allow the policy objectives to be achieved. - Westpac
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