Economists have interpreted the Reserve Bank’s November meeting minutes as modestly hawkish, suggesting the central bank is becoming less convinced that monetary policy remains restrictive amid signs of stronger economic momentum.
The November monetary policy meeting saw the RBA leave the cash rate unchanged at 3.60 per cent, but analysts noted a shift in tone, with the board highlighting that policy was “still slightly restrictive but that it was also possible this was no longer the case”.
Members also acknowledged that while part of the recent inflation increase was temporary, “strength in several components pointed to the possibility that some part of the increase might prove persistent”.
CBA head of Australian economics Belinda Allen said the minutes “highlight the questions for the future of monetary policy in Australia being considered by the board,” pointing to the persistence of inflation, the labour market outlook, and the restrictiveness of the cash rate as the key issues.
“The key focus of the Board from here will be on the inflation front,” Allen said. “We agree most of the upside surprise in inflation was driven by temporary factors, although signs of persistence have also lifted.”
She said subsequent data had strengthened the case that the economy was running close to full capacity.
“Employment growth rebounded in October, up by 42,000, and the unemployment rate fell to 4.3 per cent, removing one near-term concern around a material weakening in the labour market,” she said.
Allen added that lending growth rose 9.6 per cent in the September quarter, household spending continued to increase, and consumer sentiment surged by 12.8 per cent in November.
“These developments suggest the cash rate is not particularly restrictive at current levels,” Allen said, noting that Deputy Governor Hauser’s recent speech on Australia’s lower ‘speed limit’ reinforced concerns about limited spare capacity in the economy.
ANZ senior economist Adelaide Timbrell echoed that the minutes were “a little more hawkish than the post-meeting statement,” with the RBA becoming more attuned to upside risks in both demand and inflation.
Nevertheless, ANZ continues to expect one more 25-basis-point cut in the first half of 2026, but Timbrell said the RBA’s evolving assessment of the labour market will be crucial for any policy shift.
CBA expects the cash rate to stay on hold through 2026, but Allen cautioned that upcoming inflation data could prompt a change in tone.
“The release of the full monthly CPI on 26 November will complicate the view,” she said. “If inflation prints higher than the RBA expects and economic momentum continues, the February meeting could see the Board expand its consideration beyond cuts or holds — to include all policy options.”
The minutes also revealed the RBA is modelling two paths for inflation, one assuming a further 30 basis points of cuts and another assuming no change, with the latter showing inflation settling closer to the midpoint of the target range.
For Allen, this reinforced the likelihood of the RBA remaining patient but increasingly data-sensitive.
“We generally see the speed limit of the Australian economy being reached in coming quarters and inflation pressures persisting,” she said. “We don’t expect any major shift in tone this year, but if momentum holds, the RBA’s language could turn more hawkish heading into 2026.”
