RBA Rate Hike Possible Sooner Than Expected Amid Inflation Risks

The Reserve Bank of Australia (RBA) may raise interest rates sooner than expected, according to Commonwealth Bank of Australia (CBA), which now predicts a 25-basis-point hike to 4.6% at its Sept. 28-29 meeting.

This shift in expectations is driven by concerns over inflation risks, as Brent crude has risen above $100 per barrel and local data shows stronger than expected economic growth and inflation.

CBA notes that senior RBA officials have sounded more alert to upside inflation risks, but the bank does not expect a rapid series of hikes. A jump to 4.85% would signal a much tougher stance, weighing heavily on growth and home prices.

Mortgage pricing may react earlier than expected, with variable-rate loans and fixed-rate deals offered to new borrowers potentially changing sooner rather than later.