RBA Hikes Ahead: Bullock and Hauser Signal Higher Rates

RBA Governor Michele Bullock and Deputy Governor Andrew Hauser have continued to strike a firm tone regarding inflation, with Bullock stating that there is a general consensus that the neutral interest rate has risen. This means that the RBA's current policy setting may not be as restrictive as previously thought.

Bullock emphasized that inflation risks are skewed to the upside and that it's hard to look through persistent inflationary shocks. Hauser reinforced this message, stating that the Board is totally committed to hitting the inflation target.

UBS has revised its call for the RBA to raise rates two more times, taking the cash rate to a terminal rate of 4.85%. This is a more aggressive path than the roughly 70-75% probability currently priced for a single 25 basis point hike at the Board's September 28-29 meeting.