RBA Minutes from September Meeting noted that the Board was concerned excess demand in the economy was greater than previously assumed and the board saw an increased risk of persistently elevated inflation, reiterates will increase rates further if needed

Says: All board members agreed that a 25bps rate hike was necessary. Board briefly weighed the case for keeping rates unchanged, including the decline in house prices. Board discussed upside inflation risks and factors that could sustain higher inflation. Some upside inflation risks had already emerged or intensified since August. Board highlighted the need to adjust rates in a timely manner to keep inflation expectations anchored. Domestic consumption would need to remain subdued for an extended period to bring inflation back to target. Middle East tensions had escalated, with oil prices substantially above assumed levels. Liaison contacts indicated widespread domestic cost pressures, including unit labour costs. Some measures suggested financial conditions were only moderately restrictive. A higher global neutral rate could weigh on the AUD if Australian interest rates remained unchanged. Signs of AI-driven price pressures were beginning to emerge in Australia's technology sector. Board members cautioned against placing too much weight on employment data due to changes in survey methodology. Neutral rate models suggested monetary policy remained somewhat restrictive, although the neutral rate may have increased. A larger-than-anticipated decline in house prices suggested financial conditions could be relatively tight. Interest rate hikes overseas could ease Australian financial conditions by weakening the AUD.