Reserve Bank of Australia Minutes comparison — 20 May 2025 vs 8 July 2025
This Reserve Bank of Australia minutes comparison covers 20 May 2025 and 8 July 2025. Overall, the newer document was more hawkish. The current document marks a hawkish pivot from the prior meeting's dovish cut: the Board opted to hold rates, citing upside inflation risks and reduced global downside scenarios, while acknowledging internal dissent favouring easing. This suggests the easing cycle is paused, with the next move dependent on incoming data and inflation persistence.
What changed
More hawkish. The current document marks a hawkish pivot from the prior meeting's dovish cut: the Board opted to hold rates, citing upside inflation risks and reduced global downside scenarios, while acknowledging internal dissent favouring easing. This suggests the easing cycle is paused, with the next move dependent on incoming data and inflation persistence.
- Inflation — More hawkish. Prior confidence in inflation returning to target has been replaced by caution over upside risks and transitory disinflation signals.
- Labour Market — More hawkish. Prior explicit forecast of rising unemployment softened to 'closer to balance', implying less urgency for easing.
- Rate Path — More hawkish. The Board held rates despite market expectations of a cut, with a majority favouring caution and forward guidance emphasising data dependence over further easing.
- Balance Sheet — Little changed. No reference to balance sheet policy in either document; no shift.
Key wording
Members noted that such assumptions might prove overly optimistic.
Market pricing implied a total of around three 25 basis point reductions this year, a little more than expected at the time of the previous meeting.
A 25 basis point reduction in the cash rate at the current meeting was widely anticipated.
The shift lower in policy rate expectations had been due to both international developments and domestic data relating to consumption and inflation.
Members welcomed the broad-based easing in underlying inflation over the preceding year. Trimmed mean inflation had returned to the 2–3 per cent range for the first time since late 2021 and, in six-month annualised terms, was at the midpoint of that range.
Members noted that the outlook for the global economy had deteriorated over the preceding three months, given developments in trade policies, but that the extent of the deterioration was unusually uncertain.
Measures of global economic uncertainty had fallen somewhat, as reflected in a narrower range of expectations among professional forecasters for US GDP growth in late 2025, but the outlook remained highly unpredictable.
Members acknowledged that there had been previous occasions when market participants had been very confident about the outcome of a monetary policy decision but the (Reserve Bank) Board had decided on an alternative course.
Members noted that a 25 basis point reduction in the cash rate at the current meeting was almost fully priced in by market participants and was also expected by most market economists.
Members debated whether such effects might be larger or smaller than assumed in May.
Those forecasts therefore suggested that the current setting of monetary policy was modestly restrictive.
the reduced likelihood of the most severe scenarios materialising for the world economy meant that more weight could be placed on the baseline forecasts, and less on the downside scenario, than had been warranted in May when assessing the medium-term outlook.
Official documents
Background reading
Related
Earlier meeting · Later meeting · Next comparison · Methodology
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