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Reserve Bank of Australia Raises Cash Rate to 4.6%, Westpac Predicts Further Hike in November
The Reserve Bank of Australia (RBA) has increased its cash rate by 25 basis points to 4.6% in a unanimous decision by its Monetary Policy Board on September 29, 2026. This move was anticipated by analysts and marks a significant shift from the RBA's stance during its August meeting, where an extended hold on rates was considered likely. Westpac's chief economist, Luci Ellis, noted that the RBA's decision reflects rising inflation risks, particularly linked to global energy prices, which have exceeded previous forecasts.
The RBA's post-meeting statement highlighted concerns regarding the ongoing conflict in the Middle East, which has contributed to higher energy costs. While firms are beginning to pass on these costs, the RBA indicated that this pass-through is only partial. The statement also mentioned a shift in the assessment of the labor market, now described as easing, with unemployment rates surpassing earlier forecasts. This change suggests a divergence in views regarding economic capacity and inflation pressures.
Westpac anticipates that the RBA will likely implement another rate hike in November, barring any significant resolution to the Middle East conflict or a substantial decrease in energy prices. However, the bank sees a higher threshold for additional hikes beyond November, given the cumulative impact of previous rate increases, a softening labor market, and expected declines in the housing sector.
Source: KLEA News