RBA Keeps Rate Hike Option Open Amid Slowing Business Conditions

Australia's central bank has left the door open for another interest rate hike in September, despite business conditions hitting six-year lows and households showing less optimism.

Reserve Bank of Australia Assistant Governor Sarah Hunter emphasized that inflation remains a priority and that higher rates are necessary to cool spending and bring demand closer to what the economy can supply.

Hunter noted that previous hikes have already slowed housing markets and pushed prices lower in most major cities, but traders now see a 70% chance of a 25-basis-point move to 4.60% at the September 29 meeting, up from under 10% a month earlier.

This means lenders may adjust mortgage rates ahead of the expected hike, potentially putting pressure on home-buying activity and prices after the initial policy move.