RBA Expected to Raise Interest Rates Again Amid Inflation Fears

The Reserve Bank of Australia (RBA) is expected to raise interest rates for the fourth time in 2026, following a two-day meeting that began on Tuesday. Economists predict a 25-basis point increase to 4.6%, which would be the highest Australian cash rate in almost 16 years.

Markets are pricing in a 90% chance of a September hike, with some analysts suggesting it may not be enough to combat inflationary pressures. RBA Governor Michele Bullock has stated that the board will continue to raise interest rates if they see upside risks to inflation in the economy, which appears to be materializing.

One of the main drivers of inflation is oil prices, which are increasing due to the intensifying conflict in the Middle East. Saudi oil supplies have been under pressure since an Iran-backed attack on key pipeline facilities, and global oil prices may escalate unless a compromise is found.