November interest rate rise was needed to avoid risk of larger future increases, RBA says

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Minutes of the November meeting show the RBA board believed the risk of inflation continuing above target was too high to keep rates on hold

The Reserve Bank said it lifted its key interest rate this month to reduce the risk of a “larger monetary policy response” in coming months given the persistence of inflation and the stronger than expected performance of the economy.

The RBA, in its minutes released on Tuesday, also noted that its forecasts for inflation to decline to within its 2%-3% target range by the end of 2025 were based on one or possibly two more interest rate increases.

The minutes explain in more detail the reasons why the RBA opted to lift its key interest rate a 13th time in the current cycle at its 7 November meeting. The 25 basis-point increase brought the rate to 4.35%, or the highest level since late 2011.

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