The Reserve Bank of Australia is widely expected to raise its cash rate 25 basis points to 4.60% today, the highest level since November 2011. With the move almost fully priced, AUD/USD traders are focused on the statement tone and Governor Michele Bullock's press conference for signs of another hike ahead.
The Reserve Bank of Australia looks set to raise its cash rate 25 basis points to 4.60% today, ending a two-meeting pause and pushing borrowing costs to their highest since November 2011. The decision lands at 2:30pm AEST, with Bullock holding a press conference an hour later. It would mark the fourth increase of 2026.
Consensus is close to unanimous. A Reuters poll of 34 economists found all but one expecting the hike, and all four major banks — CBA, Westpac, NAB and ANZ — are forecasting a September move. Money markets are pricing a very high probability of a hike, with estimates ranging from around 80% to 95% depending on the source.
Sticky inflation hardens the case
A month ago, nearly all economists expected the RBA to hold at 4.35%. But trimmed mean inflation held at 3.6% in July, well above the RBA's end-year forecast of around 3.3%, while growth and employment proved more resilient than expected.
RBA officials appeared before a parliamentary committee on September 18, and many economists read their comments as confirmation a September move was coming. CBA brought its forecast forward from November, citing higher oil prices, and ANZ economists said the bank no longer views energy price spikes as a temporary blip.
CBA expects a unanimous decision with hawkish language, while Westpac expects a split vote reflecting differing views on supply capacity and labour market slack. Most economists still see 4.60% as the cycle peak: 26 of 31 Reuters poll respondents expect the cash rate to remain at 4.60% by the end of December, with a minority looking for 4.85%. CBA says a September-quarter trimmed mean reading of 1% or more could put another hike on the table, ANZ forecasts a second increase in November, and CBA has pushed back its expected start to rate cuts to August 2027.
Households already feel the shift
Eighteen lenders have lifted at least one fixed rate in September, and a 25bp rise would add around $90 a month to repayments on a $600,000 loan if passed on in full.
AUD/USD hinges on the statement's tone
With the hike all but priced, AUD/USD was trading around 0.70 ahead of the decision, and the currency's reaction is likely to turn on the statement rather than the rate move itself. ING expects a hawkish hike to support the Australian dollar, though it flags a test below 0.70 against the US dollar as the near-term risk with the greenback near a two-month high.
Oil is the wider swing factor, since higher energy prices linked to the Middle East conflict feed directly into the RBA's inflation concerns. Any sign the board sees that energy pass-through as persistent would keep a November hike live in pricing, while a more measured message could leave the currency leaning on the rate differential instead.
Source: Investinglive
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