RBA Set to Hike Rates Again as Inflation Risks Grow

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

Markets are pricing in a 90% chance of another rate increase, with ASX 30-day interbank cash rate futures showing strong bets on a hike. The RBA's hawkish outlook is driven by sticky Australian inflation, which has risen sharply over the past year due to local demand outstripping supply.

A recent surge in oil and gas prices, stemming from the US-Iran conflict, has 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 remains well above the RBA's 2-3% annual target.