RBA Hikes Rates 25bps, Markets Eye Next Move

The Reserve Bank of Australia (RBA) delivered its expected 25 basis point interest rate hike to 4.6%, solidifying expectations that another increase is on the horizon.

The RBA's decision was unanimous, and the accompanying statement had a hawkish tone, warning that it remains prepared to increase the cash rate further if needed to bring inflation sustainably back to target.

This conditional tightening bias has already been priced into the market, with markets assigning around a 44% probability of another 25 basis point increase in November, according to futures-based models.

The focus now shifts to RBA Governor Michele Bullock's press conference, which will provide insight into whether the Board discussed delivering a 50 basis point increase and how hawkish or dovish the tone will be.