RBA Eyes September Rate Hike Amid Australia's Deteriorating Inflation

The Reserve Bank of Australia (RBA) is expected to increase interest rates in September due to high inflation levels. The RBA's current cash rate sits at 4.35 per cent, but some experts argue that it should be between 4.75 and 5 per cent. This increase would reflect the bank's efforts to curb inflation, which has been described as 'dire'.

The argument for a rate hike is based on Taylor-rule modelling of the RBA's optimal policy path, suggesting that the cash rate should be higher to combat inflation. The modelling suggests that the appropriate cash rate range is between 4.75 and 5 per cent.