RBA to Consider Rate Hike Amid Resilient Economy and Slowing Growth

The Reserve Bank of Australia (RBA) is set to consider another rate hike after hotter-than-expected inflation data revealed that the economy remains resilient despite higher interest rates and fuel prices.

Westpac senior economist Pat Bustamante expects GDP growth to slow to 0.2 per cent for the June quarter, but notes that household spending grew at its fastest rate since July 2023 in August, indicating economic stability rather than decline.

The Australian Bureau of Statistics (ABS) will release national accounts figures on Wednesday, which will further add to the case for more rate hikes if they show strong growth. However, Bustamante expects the annual GDP growth rate to slow to 1.7 per cent year-on-year, which might not be enough to convince the RBA that enough spare capacity is opening up in the economy to control inflation.