MPC minutes suggest rate hikes are a long way off

The minutes of the Reserve Bank’s February policy meeting – in which interest rates were left unchanged – show that the MPC remains cautious on the inflation outlook but that it is also committed to keeping policy accommodative to ensure that the economic recovery becomes more entrenched. In all, we think markets are too hawkish in discounting modest rate hikes within the next 12-18 months, and expect rates to stay on hold for the foreseeable future.