RBA Seen Hiking Rates Again as Inflation Risks Grow

The Reserve Bank of Australia (RBA) is widely expected to hike interest rates by 25 basis points at its meeting on September 29. This would be the central bank's fourth 25 bps hike this year, taking rates to their highest point in 15 years.

The move is fueled by sticky Australian inflation, which has risen sharply over the past year due to domestic demand outstripping supply. A recent surge in oil and gas prices, stemming from the U.S.-Iran war, added to domestic inflation, with energy price increases spilling over into other sectors.

Monthly inflation data due later this week is expected to show CPI rising to 4.1%, while core CPI is expected to remain above the RBA's 2%-3% annual target. ANZ analysts predict another 25 bps hike in November, taking rates to their highest levels since 2008.