Macquarie Predicts RBA Rate Hike as Inflation Lingers Above Target

The Reserve Bank of Australia (RBA) is expected to raise interest rates in its upcoming meeting, according to Macquarie's latest research note. The bank has been trying to balance low unemployment with stubbornly high inflation, which has lingered above the RBA's target band for 17 out of the last 20 quarters.

In the first half of 2025, it seemed like the RBA's experiment had worked, with underlying inflation returning to the middle of the target band. However, growth and inflation rebounded in the second half of 2025, forcing a reversal of earlier policy cuts. The RBA has since tightened policy by 75 basis points this year, which is working, but still feels that output remains above the economy's potential.

RBA Assistant Governor Hunter highlighted concerns about oil prices and strength in July CPI data, indicating that RBA staff see enough signal to support a rate hike. Macquarie concludes that a 25 basis point increase later this month is now the most likely outcome.