Investing.com– The Reserve Bank of Australia will eventually consider loosening monetary policy amid consistent, albeit slow progress in bringing down inflation, the minutes of the central bank’s December meeting showed on Tuesday. 

The central bank had kept its benchmark cash rate unchanged at 4.35% during the December 9-10 meeting, and had given scant cues on when it could potentially begin trimming interest rates. 

The RBA noted that inflation had eased largely in line with its expectations in recent months, although underlying inflation still remained well above the central bank’s 2% to 3% annual target, and is not expected to fall within the target until at least 2026. 

The RBA minutes showed that policymakers judged that the risk to inflation returning more slowly to its target range had diminished, with a bulk of this notion being driven by weak gross domestic product growth. Private consumption had also slowed, amid weakening wage growth. 

But on the flip side, strong spending during the Black Friday sales event and resilience in the labor market kept policymakers wary over inflation, as did signs of sticky inflation in international economies. 

Still, the minutes showed that policymakers acknowledged that if they gained more confidence that inflation was easing in line with their targets, it would be “appropriate to begin relaxing the degree of monetary policy tightness,” marking the first time since its recent rate hike cycle that the RBA has acknowledged the possibility of easing. 

But until the RBA was able to gain such confidence, it signaled that rates will remain unchanged.

Analysts expect the central bank to begin cutting rates only by the second quarter 2025 in a shallow easing cycle.