Economists now expect the Reserve Bank of Australia to raise its cash rate 25 basis points to 4.60% on Tuesday, September 29, the highest level since late 2011. With the move almost fully priced, traders are watching the RBA's statement and Governor Michele Bullock's press conference for signals on whether this is the final hike of the cycle.
Economists converge on a hike
A Reuters poll of 34 economists surveyed between September 17 and 24 found 33 expect the RBA to lift its cash rate to 4.60% at Tuesday's meeting. That would mark the fourth hike of 2026, taking cumulative tightening this year to 100 basis points.
Most respondents see it as the last move of the cycle. 26 of 31 economists forecast the cash rate will still sit at 4.60% at the end of December, while a smaller group expects a further increase to 4.85% by year-end.
With the hike close to fully priced, the Australian dollar is more likely to react to the RBA's statement and Bullock's press conference than to the decision itself. A signal that the bank stays open to hiking again could boost AUD/USD as markets price in a November move, while a clear "one and done" message could instead take some of the tightening premium out of the currency.
Sticky inflation shifted the call
The consensus has moved fast. A month ago, nearly all economists expected the RBA to hold in September, with a median forecast peak of 4.35%. That view gave way to stronger inflation pressure since the August meeting, and to Governor Bullock's doubts that policy was restrictive enough to return inflation to the bank's 2% to 3% target band.
Core inflation is the central worry. The trimmed mean measure held at 3.6% in July, against the RBA's own forecast of 3.3% by year-end. The economy also grew a little faster last quarter than the roughly 2% pace the RBA estimates it can sustain without adding to price pressures, even as momentum faded.
HSBC chief economist for Australia and New Zealand Paul Bloxham, one of five expecting another hike next quarter, said the RBA is growing impatient with above-target inflation and needs to show that returning it to target within its late-2027 horizon comes first. Growth that beat expectations, disappointing productivity and a hot July inflation reading prompted him to switch to a September hike call.
Banks split on the path ahead
Among major domestic banks, CBA, NAB and Westpac see the cash rate ending the year at 4.60%, while ANZ expects 4.85%. NAB said the risks are skewed toward a follow-up move in November, though that is not its base case.
Beyond this year, economists broadly expect the cash rate to hold at 4.60% through mid-2027, before views diverge sharply from the third quarter. The median forecast has the rate back at 4.35% by the end of 2027, within a range running from 4.85% at the top to 4.10% or lower at the bottom. Tuesday's decision and statement will shape whether markets treat 4.60% as a peak or just a waypoint.
Source: Investinglive RSS Breaking News Feed
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