RBA Rate Hike Odds Hit 74%, Market Now Prices September Move as Most Likely

The Reserve Bank of Australia (RBA) may hike interest rates in September, but it's not a done deal. The market now prices a rate increase at 74% on September 29, as per LSEG data.

Deputy Governor Andrew Hauser recently pushed back against the idea that another quarter-point increase is 'inevitable.' However, he refused to pre-commit and instead emphasized that nine board members will debate the evidence before making a decision.

The inflation evidence gives the hawks plenty to work with. The Australian Bureau of Statistics reported headline CPI rose 3.5% in the year to July, while trimmed-mean inflation stayed at 3.6%. Non-tradables inflation was 4.4%, and housing costs rose 5.0%.

Growth has not supplied an obvious reason to retreat. June-quarter GDP grew 0.4% from the prior quarter and 2.1% from a year earlier, described as 'roughly around trend' by Hauser.