Rate Watchers Eye Inflation Data as RBA Faces Pressure

The Reserve Bank of Australia is set to make its next move on interest rates, but economists are split on what that might be. The Australian Bureau of Statistics will release key quarterly inflation data on Wednesday, which could provide valuable insight into the central bank's thinking. Despite rising oil prices due to tensions between the US and Iran, NAB senior economist Taylor Nugent believes another rate rise is unlikely in 2026.

According to Nugent, his bank does not expect growth to slow enough to warrant further interest rate hikes. However, other analysts are not so sure. Research by ANZ is forecasting trimmed mean inflation of 3.7 per cent year on year, slightly below the Reserve Bank's forecast. This has led some to predict that the central bank will hold rates steady for the remainder of 2026.

But others warn that another hike cannot be ruled out in either August or November given the renewed escalation of tensions in the Middle East. The Reserve Bank governor, Michele Bullock, is set to speak in Sydney on Tuesday, and her comments are likely to be closely watched for clues on how the central bank intends to approach inflation risks.