Economists are increasingly predicting a September rate hike by the Reserve Bank of Australia (RBA) after senior officials, including Deputy Governor Andrew Hauser and Assistant Governor Sarah Hunter, made hawkish comments about the need to curb inflation. Hauser stated on Tuesday that inflation remains "one big problem" despite a strong Australian economy with low unemployment and expanding GDP. He emphasized the RBA's commitment to bringing inflation back to its 2-3% target range.
This sentiment was echoed by Assistant Governor Hunter, who indicated the board "may well have to raise interest rates to tackle [high inflation]." The RBA's monetary policy board is scheduled to meet on September 28-29. Headline inflation in July slowed marginally to 3.5%, but this was still above the RBA's target and higher than expected, while the trimmed mean, the RBA's preferred measure, held steady at 3.6%. These figures are intensifying pressure on the central bank to act.
Several major banks, including Macquarie Bank and NAB, are now forecasting a 25-basis-point rate hike in September, which would bring the cash rate to 4.6%, the highest level since November 2011. Westpac, while considering a November hike as most likely, acknowledges a September move is possible. The RBA's recent communication strategy has also been highlighted, with Hauser acknowledging public frustration over inflation and stating the bank needs to better explain its decisions.
