RBA Prepares for Another Rate Hike Amid Inflation Fears

The Reserve Bank of Australia (RBA) is preparing for another interest rate hike as it monitors inflationary pressures in the economy. According to RBA governor Michele Bullock, monetary policy needs to focus on limiting indirect effects and keeping inflation expectations anchored.

Bullock's comments have cemented market expectations that the RBA board will increase interest rates next week. The labour force figures, set to be released by the Australian Bureau of Statistics (ABS) on Thursday, are expected to show the unemployment rate held steady at 4.5 per cent in August.

The RBA is concerned about second-round price rises in the economy, as seen in sectors such as construction and logistics, which have been affected by rising oil prices. When costs increase in these areas, businesses often pass them on to customers, leading to higher prices across the board.