RBA Hike Expected as Bullock Seeks Labor Slack

The Reserve Bank of Australia (RBA) is expected to raise interest rates next week, according to derivatives pricing and economists. This move would bring borrowing costs to their highest level since late 2008, potentially reaching 4.85% in November.

RBA Governor Michele Bullock said that the current jobless rate of 4.5% is a bit tight and that shifting it to a range of 4.5%-5% would help cool the labor market and ease inflation pressure. She made these comments at a recent fireside chat in Sydney.

The August jobs data is set to be released soon, with economists predicting unemployment will remain unchanged. However, markets have already priced in two more 25-basis-point increases after next week's expected hike, bringing the policy rate to 4.6% from 4.35%.