RBA Set for September Rate Rise, CreditorWatch Predicts

CreditorWatch's Chief Economist Ivan Colhoun expects the Reserve Bank of Australia (RBA) to raise interest rates by 25 basis points at its September board meeting. He assigns a 100% probability to an increase and a 95% to 100% chance that it will be 25 basis points rather than a larger move.

The decision comes after a run of economic signals strengthened the case for tighter policy, including stronger-than-expected second-quarter growth, a higher-than-expected July trimmed mean consumer price index reading, elevated oil prices, and a labour market that remains somewhat tight. Colhoun also argues that the AI investment boom is adding to demand and inflation pressure.

Colhoun bases his view on recent public messaging from the Bank, which he says has made its stance clear. He notes that leaving rates unchanged would be inconsistent with both the economic data and the central bank's recent communication. In fact, Colhoun puts the probability of no change at 0%.