RBA Faces Pressure to Raise Rates Amid Persistent Inflation

The Reserve Bank of Australia (RBA) is under pressure to raise interest rates again due to stubbornly high inflation, which has remained above-target for nearly five years. According to a survey by Finder, 90% of respondents expect an upcoming rate hike, with many predicting another increase in November.

HSBC's Paul Bloxham believes the case for lifting the cash rate is strong, citing the recent surge in inflation and GDP growth. He also notes that global developments, such as rising fuel and food prices, are contributing to the need for further tightening.

Bloxham expects a 25-basis-point increase at both September's monetary policy meeting and November's, which would take the official cash rate up to 4.60%. However, he warns that this will weaken growth further, with a risk of recession rising to close to 50:50.