Investing.com - During their September policy meeting, the Reserve Bank of Australia (RBA) deliberated on the potential risks posed by a significant slowdown in China to the global economic outlook. The board highlighted the challenges faced by Chinese policymakers as they grapple with slower structural growth and the transition of growth sources within the Chinese economy.
Despite the ongoing issues in China's property market, the RBA noted an increase in iron ore prices over the past month. This upswing was attributed to persistent steel demand from various sectors and the potential for additional policy support. Oil prices have also seen a significant rise, with an almost 20% increase from their lowest point in late June, and even larger increases for refined fuel prices.
The RBA board members weighed two potential courses of action for monetary policy during the meeting: either raising the cash rate target by an additional 25 basis points or maintaining the current cash rate target. The argument for maintaining the current rate was based on the significant increases in interest rates over a short period, and the yet-to-be-realized full effects of tighter monetary policy.
Board members acknowledged the recent surge in petrol prices, a key factor for household inflation expectations. They noted that this underscores how the process of bringing inflation back on target could be inconsistent and unpredictable.