RBA Interest Rate Hike Seen as Near Certain Next Week

Australian households are bracing for what markets now view as an almost certain interest rate increase when the Reserve Bank of Australia concludes its policy meeting next Tuesday.

The central bank is expected to push borrowing costs to a 15-year high as inflation proves stubbornly resistant to the tightening already delivered this year, with market pricing for a hike at the upcoming meeting climbing from 72 percent at the start of September to 88 percent.

Nearly all economists polled by Reuters expect the RBA to lift the cash rate for a fourth time this year to 4.6 percent, with some analysts suggesting policymakers may need to consider an aggressive move, including a larger interest rate rise of 40 or 50 basis points.

Housing Market Absorbs the Blow, as National home prices have fallen nearly 4 percent from their peaks, compounded by a government tax change on investment properties that has curtailed investor lending. A growing number of economists now project a peak-to-trough decline of 10 percent this cycle, which would be the largest in three decades.