RBA to Consider Interest Rate Hike as Economy Shows Signs of Resilience

The Reserve Bank of Australia will soon consider national accounts figures to decide on another rate hike. The Australian Bureau of Statistics is set to release economic growth data, which could further support a case for higher interest rates.

According to Westpac senior economist Pat Bustamante, the economy has shown signs of resilience, with investment in data centres, renewable energy, and home building contributing to this stability. However, he expects GDP growth to slow down to 0.2% for the June quarter.

The Reserve Bank is closely monitoring inflation data, which has been higher-than-expected. If the economic growth rate continues to show resilience, it could add to the case for more interest rate hikes. But if it slows down as predicted, it might not be enough to convince the RBA that spare capacity is opening up in the economy.

Looking abroad, central banks in New Zealand and Canada are set to decide on interest rates. Markets are pricing in a second straight Reserve Bank of New Zealand rate hike, lifting the official cash rate to 2.75%. Meanwhile, Wall Street investors are taking caution after Federal Reserve chair Kevin Warsh reiterated the focus on fighting inflation.