The Reserve Bank of Australia will release the minutes of its August Monetary Policy Board meeting on Tuesday, August 25, at 11.30am Sydney time — equivalent to 01.30 GMT and 9.30pm US Eastern time on Monday, August 24 — according to a preview from the Commonwealth Bank of Australia (CBA). The minutes should show just how close the RBA came to hiking in August, and how the Board is weighing an outlook in which upside inflation risks remain live. Because the Board meets only about every six weeks, the minutes — which record the options considered and the arguments around the table — are the fullest scheduled account of its thinking until the next decision.

The August decision: a second consecutive hold

At its August meeting, the Board held the cash rate steady at 4.35 percent. The decision was unanimous and marked the second consecutive hold following three rate hikes earlier in the year.

CBA's preview notes that the Board judged policy to be somewhat restrictive and the economy to be slowing broadly as anticipated. At the same time, the Board sharpened its forward guidance, stating that it would raise rates again if upside inflation risks materialise. The stakes of that bias are concrete for households: a large share of Australian mortgages carry variable rates, so changes in the cash rate pass through to repayments far faster than in fixed-rate-dominated markets such as the United States.

In the post-meeting press conference, Governor Michele Bullock said a further increase remained "quite possible." She also confirmed that both a hike and a hold were discussed at the meeting — a shift from the prior meeting, where only a hold was on the table.

CBA suggests the minutes may shed more light on that internal debate between hiking and holding, and on how the Board is weighing the outlook given its clear tightening bias.

Hauser: inflation remains too high

That bias has been reinforced since the meeting by Deputy Governor Andrew Hauser, who joined the RBA from the Bank of England in early 2024. Speaking last week, Hauser said inflation remains too high and monetary policy needs to keep reducing demand in the economy to bring it back toward target. He warned that rates would need to rise again if inflation does not come down, while characterising the current trajectory as a slowdown rather than a recession — the RBA is not forecasting a recession, only a slowdown — and flagged upside inflation risks as a genuine ongoing concern, according to investingLive reporting.

His comments extended a message delivered consistently through the year: the RBA's earlier hikes reflected a judgment that demand had outstripped the economy's supply capacity by more than initially expected, and that acting early limits the eventual cost to unemployment. In effect, Hauser has already told markets not to rule out the next hike.

A complicated domestic and external backdrop

The domestic backdrop remains complicated. Headline inflation is running around 3.8 percent, above the 2 to 3 percent target band, with trimmed mean measures — the RBA's preferred gauge of underlying inflation, which strips out the largest price moves in each direction — proving sticky rather than falling cleanly. The Fair Work Commission's larger-than-expected 4.75 percent award wage increase, handed down by Australia's national workplace relations tribunal in its annual wage review and due to land in the third quarter, is expected to push wage growth back up after a period of moderation.

Bullock has separately noted that current market pricing for near-term rate cuts runs ahead of the Board's own thinking. Given that gap, the minutes offer the RBA a chance to push back further against that pricing without needing to move rates itself.

Layered on top of the domestic demand pressures is an external inflation risk from elevated oil prices tied to the ongoing Iran conflict and Strait of Hormuz disruption — the chokepoint through which roughly a fifth of the world's oil transits. Both Hauser and Bullock have cited that channel as complicating the Board's task, and it represents a distinct upside inflation risk the Board is watching alongside domestic demand.

Where market attention will fall

According to the report, AUD/USD and rate-sensitive Australian bonds are likely to react most to any signal in the minutes about how close the Board came to hiking in August, given that Bullock has already confirmed both options were actively discussed.

Hauser's comments last week, which explicitly flagged upside inflation risks and warned that further hikes remain possible, have already primed the market for a hawkish read. As the report frames it, that leaves the minutes carrying asymmetric risk: a genuinely hawkish tone would confirm positioning already built, while anything perceived as dovish could trigger a sharper unwind in AUD longs — the positions betting on a higher Australian dollar.

Per the report's analysis, any explicit reference in the minutes to the oil-price channel would reinforce the case for a live tightening bias rather than a genuine pause.

Tuesday's minutes are expected to provide the clearest picture yet of how those competing pressures — sticky domestic inflation, rising award wages, and externally driven energy costs — are shaping the Board's next move, with the next round of quarterly CPI data set to test whether the upside risks the Board keeps citing are materialising.

Source: Investinglive