Developing story.

The Reserve Bank of Australia's minutes have been released as follows:

• Board remains committed to doing what is necessary to ensure that inflation in Australia returns to the target over time.
• Members agreed that further steps would need to be taken to normalise monetary conditions in Australia over the months ahead.
• Members noted that gauging the level of the neutral rate is challenging in practice because it cannot be directly observed.
• Members considered the possibility of raising interest rates by 25 basis points or 50 basis points.
• Level of interest rates was still very low for an economy with a tight labour market and facing a period of higher inflation.
• Members discussed three points, first that current cash rate is well below the lower range of estimates for the nominal neutral rate.
• Members viewed it as important that inflation expectations remained well anchored and that the period of higher inflation be temporary.
• This suggests that further increases in interest rate will be needed to return inflation to the target over time.
• Longer-term measures of inflation expectations were well anchored.
• Neutral rate framework indicates that if inflation expectations rise, level of nominal interest rates required to return inflation to the target will be higher than otherwise.
• Inflation is forecast to peak later in 2022 and then decline back towards the 2 to 3 per cent range in 2023.
• Higher interest rates will also help establish a more sustainable balance between the demand for and the supply of goods and services.

Meanwhile, there has been little to no reaction to the minutes in AUD/USD. The pair continues to consolidate in a flat position for the session near 0.6810. 

About the RBA minutes

The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.