RBA May Raise Rates Again Amid Persistent Inflation Concerns

The Reserve Bank of Australia (RBA) may raise interest rates again if inflation fails to ease as expected, according to Assistant Governor Sarah Hunter.

Hunter spoke at a property conference, emphasizing that controlling price pressures remains the central bank's immediate priority. The RBA has kept its cash rate at 4.35% since its August policy meeting and had already raised rates by a total of 75 basis points this year before pausing.

Markets have increased their expectations of another rate increase following July's inflation data, with around a 70% probability of a 25-basis-point increase to 4.60% at the RBA's September 29 meeting.

The RBA wants to see consumer demand soften further so that overall demand in the economy can come into better balance with supply. Hunter noted that previous rate increases had already slowed housing activity and pushed prices lower in most major Australian cities, but she did not expect the current tightening cycle to result in a recession.