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RBA set to raise rates in September as inflation stays elevated

The Official Cash Rate is expected to move up 25 bps to 4.60% from 4.35%, with the Australian dollar likely reacting to Governor Michele Bullock’s guidance.

Reported · Written up by our desk · Central Banks

FXStreet reports the Reserve Bank of Australia is widely expected to lift its Official Cash Rate by 25 basis points to 4.60% from 4.35% at its September meeting on Tuesday, following two prior meetings where rates were held unchanged.

The decision is set to be released at 04:30 GMT, alongside the Monetary Policy Statement, with Governor Michele Bullock scheduled to hold a press conference at 05:30 GMT. The article says what Bullock signals about the next rate move is the key driver for the Australian dollar.

FXStreet links the expected hike to recent inflation and economic conditions, saying Australia’s July inflation was hotter than expected. It notes the monthly CPI rose 1.0% versus expectations of 0.8%, annual inflation remained at 3.5%, and trimmed-mean inflation was steady at 3.6%.

The RBA has also pointed to risks from higher energy prices, the Middle East conflict, strong investment, and persistent domestic cost pressures, according to FXStreet. The article adds that GDP rose 0.4% in Q2, but economic momentum is slowing, with annual GDP growth at 2.1%.

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