RBA Hikes Cash Rate 25bp as Markets Eye November

The Reserve Bank of Australia (RBA) has increased the overnight cash rate by 25 basis points to 4.6% at its September meeting, as widely expected by markets and economists alike.

The decision was unanimous, with the RBA's statement carrying a more hawkish assessment of both growth and inflation compared to August. The statement notes that global energy prices are now higher than assumed in the previous forecast, while recent inflation outcomes were stronger than expected.

The RBA also suggests that growth has surprised modestly to the upside relative to its prior forecast, with June-quarter output being stronger than expected at the margin.

Markets are currently assigning around a 44% probability of another 25 basis point increase in November, according to our futures-based model. The focus will be squarely on RBA Governor Michele Bullock's press conference, which begins at 3:30pm AEST, to determine whether the Board discussed delivering a 50 basis point increase.