RBA Keeps Hiking Rates Amid Inflation Concerns

The Reserve Bank of Australia (RBA) has kept its options open after a hawkish hike, suggesting further tightening in the months ahead. The RBA hiked rates as expected, but left the door ajar for additional rate increases.

Recent data shows that household spending in August was weaker than expected, which may indicate that the recent acceleration in consumption is losing momentum. However, this weakness is unlikely to prevent the RBA from hiking rates at its meeting later this month.

The RBA has continued to signal concerns about upside risks to inflation, and survey data shows that firms still face elevated price pressures. As a result, we expect a 25bp hike to 4.60% later this month.