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Investing.com-- The Reserve Bank of Australia is not committed to cutting interest rates further after a 25 basis point reduction in February, the minutes of the central bank’s meeting showed on Tuesday.
Policymakers remained on edge over potential upside in inflation, even as some signs of cooling economic growth and an easing labor market motivated the central bank to cut rates for the first time in five years. The RBA cut its benchmark cash rate by 25 basis points to 4.10%.
Tuesday’s minutes reiterated the RBA’s largely data-driven approach to further easing, with the trajectory of inflation being the central bank’s biggest consideration. The central bank also reiterated its focus on bringing inflation sustainably within its 2% to 3% annual target.
“(RBA board) members agreed that their decision at this meeting did not commit them to further reductions in the cash rate target at subsequent meetings,” the minutes said.
“While economic outcomes had given members more confidence that they could return inflation to target at the same time as preserving most of the gains in the labour market with a lower cash rate, they agreed that this was not yet assured.”
Still, the central bank noted some progress had been made towards bringing down inflation, which had surged to 30-year peaks in 2023, before retreating sharply over the past year.
February’s rate cut came amid some signs of cooling in the Australian economy, as gross domestic product growth came close to turning flat, while the labor market was seen growing at a slightly slower pace than seen in recent years.
Tuesday’s minutes also showed that RBA members were more concerned about downside risks to the economy, and that the 25 bps cut was also driven by concerns over keeping rates high for too long.
Still, the RBA remained wary that easing policy too soon could add to inflation.