Australia's central bank is set on raising interest rates again as it battles to contain red-hot inflation, but sees a case for slowing the pace of hikes as rates approached more normal levels.
Minutes of the Reserve Bank of Australia's $(RBA)$ September Board meeting out on Tuesday reiterated that policy was not on a pre-set path and would be balanced to try and keep the economy on an even keel.
"All else equal, members saw the case for a slower pace of increase in interest rates as becoming stronger as the level of the cash rate rises," the minutes showed.
The central bank lifted its cash rate by 50 basis points to 2.35% at the Sept. 6 meeting, the fifth hike in as many months for a total increase of 225 basis points.
Markets are wagering on yet another half-point hike in October, in part to keep pace with the U.S. Federal Reserve, which is widely expected to lift its rates by 75 basis points this week.
RBA Governor Philip Lowe has flagged the chance of a slowdown in hikes at some point, but also underlined the importance in a very tight labour market of keeping inflation expectations anchored.
The emphasis on inflation and a hawkish outlook from the Fed has led Westpac chief economist Bill Evans to revise up his call on rates and he now sees a half-point move in October rather than 25 basis points.
He also looks for quarter-point hikes in November, December and February taking rates to a peak of 3.6%.
"Clear evidence of the expected slowdown in inflation will not be apparent until late February, allowing the RBA to go on hold in March on evidence that growth is slowing and that inflation and rates have also peaked in the U.S.," said Evans.