RBA Rate Hike Looms Amid Inflation Pressure
The Australian sharemarket is bracing for a cautious start to the week, as investors anticipate a fourth interest rate rise this year from the Reserve Bank of Australia. The S&P/ASX 200 Index is expected to open flat on Monday, following four consecutive weeks of losses that have wiped out all of its gains for the year.
The index has shed 4.5% in September, with financial markets fully pricing in a quarter-percentage-point increase to the cash rate on Tuesday, taking it to a 15-year high of 4.6%. State Street Investment economist Krishna Bhimavarapu suggests a path towards a 5% terminal cash rate.
The Reserve Bank has already led developed nations with three consecutive rate hikes this year, and other central banks, including the US Federal Reserve, are now following suit. ANZ head of Australian economics Adam Boyton cautions that the coordinated global tightening, combined with higher energy prices and rising bond yields, poses risks to global growth.