RBA set to hike rates next week as energy costs spiral
Its nine-person board will meet on Sep 28-29
The Reserve Bank of Australia (RBA) is set to increase its key interest rate next week due to rising energy costs, according to Bloomberg Economics. The bank has signaled a hawkish stance, indicating that it may hike rates again in November. James McIntyre, a former analyst, believes the RBA's patience is running out. The surge in energy prices is expected to push companies to pass on higher input costs to consumers.
ANZ Bank and UBS Group AG have also called for rate hikes in September and November, respectively, both targeting a 4.85 per cent key rate, the highest since 2008. Commonwealth Bank of Australia has brought forward its rate-hike expectation to next week, citing Brent oil prices above US$100 per barrel. The RBA's nine-person board meets on Sep 28-29, and Governor Michele Bullock stated that some upside risks are materializing.
Australia's per capita diesel consumption is among the highest globally, and freight companies will pass higher diesel prices to firms through fuel surcharges. RBA Assistant Governor Sarah Hunter highlighted the conflict in the Middle East and its impact on oil prices, emphasizing that the board remains highly concerned about inflation risks.
Market participants anticipate a 90 per cent chance of a quarter-percentage point hike to 4.6 per cent next week.
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