Australian Economy Expands 0.4%, Fueling Rate Hike Speculation

Australia's economy expanded by 0.4% in the June quarter, reaching an annual growth rate of 2.1%, but the result was met with concerns about the durability of the recovery and the Reserve Bank of Australia's (RBA) next interest rate move.

The quarterly growth was lower than expected, and household consumption increased just 0.4% over the three months, while private investment contracted 0.5%. The RBA has previously warned that population growth is becoming an increasingly important contributor to headline economic expansion.

Economists remain divided on whether the RBA will tighten policy again as soon as September. Some experts believe a rate hike could occur in November, with markets moving to fully price a 25-basis-point increase by then.