RBA interest rates: rate hike is more ‘likely’ this year after the Reserve Bank of Australia’s tough talk

Already a subscriber?The Reserve Bank may have to lift the cash rate as soon as August, according to an increasing number of economists and traders, as the central bank’s patience on inflation appears to be growing thin.

“I’d put the probability of a hike this year at around 30 per cent with cuts not coming until next year.”The governor said on Tuesday that “a lot needs to go our way” for the RBA to remain on the narrow path to a soft economic landing, but denied that the chances of a tightening had increased.don’t believe her and have ramped up bets that the next rate move in Australia will be higher – making the RBA an outlier among the world’s major central banks, which have already started to cut rates.

The all-important June quarterly inflation report will be released on July 31, just before the RBA board meets on August 5- 6, which some economists are now calling “live” for a possible rate rise.They say an increase in the consumer price index of 0.9 per cent or above in the quarter could tip the central bank to lift the cash rate to 4.6 per cent.

UBS chief economist for Australia George Tharenou said on Wednesday the governor had set the stage for an August increase should core inflation come in at around 1 per cent.Betashares’ chief economist, David Bassanese, also said there was a “material chance of a rate rise” in August should inflation continue to surprise, making it “hard for the RBA to ignore”. He ascribed a 40 per cent chance of a tightening.

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