September Rate Hike Looms as RBA Fears Inflation Rebound

RBA Governor Michele Bullock's testimony to a House of Representatives committee has solidified expectations for an interest rate hike in September. The central bank had previously warned that inflation risks coming in above forecasts, and developments since then suggest this is materializing.

The war in Iran has pushed up oil prices, which will directly add to inflation, Bullock said. Brent crude remains above $US104 a barrel, and Commonwealth Bank's Vivek Dhar warns prices could reach as high as $US150 a barrel due to global oil supplies diminishing.

RBA officials have been increasingly hawkish in their appearances, convincing economists that the bank is determined to get inflation under control. Westpac chief economist Luci Ellis has brought forward her rate rise prediction from November to September, and another hike is expected by March.