RBA Set to Hike Rates as Inflation Fears Come True

The Reserve Bank of Australia (RBA) is likely to raise interest rates in September as inflation fears come true, according to economists at one of Australia's big four banks. RBA governor Michele Bullock told a parliamentary hearing that developments since the bank's last meeting in August suggest that upside risks to inflation are materializing.

Bullock said that despite slowing economic growth, some inflation risks are becoming evident in Australia. She warned that if inflation comes in above forecasts, the bank might have to raise rates again.

Westpac chief economist Luci Ellis has brought forward her rate rise prediction from November to September following Bullock's testimony. The RBA's hawkish stance on inflation control is convincing economists and traders that the bank will prioritize getting inflation under control over jobs.