Australian interest rates

According to Sarah Hunter, assistant governor of the Reserve Bank of Australia, the RBA anticipates that inflation will rise more than previously anticipated due to rising oil prices brought on by the Middle East crisis.

Last week’s 25 bp hike in the official cash rate by the Reserve Bank of Australia (RBA) – the third consecutive increase – may have been the ‘straw that broke the camel’s back’.

Before the war in the Middle East began in late February 2026, Australia’s underlying inflation was already well above the Reserve Bank of Australia’s (RBA) target band of 2% to 3%.

RBA governor Michele Bullock warned last week that the Middle East war is already creating second-round inflation effects in Australia — where higher oil prices spill over into broader price and wage-setting — and that these effects risk making inflation more persistent and harder to bring down.

When the Reserve Bank met last Tuesday to hand down its latest monetary policy decision, a 0.25% rise to 4.35%, it also came with a new set of forecasts from the RBA’s latest Statement on Monetary Policy (SOMP).

The RBA now expects unemployment to climb.

Leading up to Tuesday’s interest rate decision from the Reserve Bank of Australia (RBA), the futures market had forecast roughly a 60% probability of a 0.25% rate hike.

These are more soft prints, but they add up.

Goldman is nervous about the rally.

In the March quarter, the CPI increased by 1.4%, which was in line with market expectations.

The Australian Bureau of Statistics (ABS) has released CPI inflation data for March, showing a headline CPI inflation rate of 4.6% for the year, below economists’ expectations of a 4.8% rise.

ANZ leads us off. It argues that the damage to consumption from fuel price hikes is material. According to the most recent ABS data available (2019–20), families consume about 77% of automobile gasoline and 29% of automotive diesel, which combined account for about 53% of Australia’s total automotive petroleum use (by volume).

We don’t get another official release of CPI data until the end of the month, but some private surveys are already ripping higher.

Here, everybody is saying rate hikes are coming.

It doesn’t usually make much sense to think of a central bank in terms of good and evil.

The Australian Bureau of Statistics (ABS) released monthly CPI inflation data for February, which obviously pre-dates the Middle Eastern energy shock.

I do believe that Australia has finally been dealt a set of circumstances that will, certeris paribus, crash the property market.

Where tech goes…goes the market… Gamma is free to exaggerate price falls.

I argued last week that the Reserve Bank of Australia’s (RBA) current tightening cycle mirrors the 2007–08 hikes before the 2008 Global Financial Crisis (GFC), when the RBA kept hiking even as the US subprime crisis was unfolding.

Author Mark Twain once famously said, “History doesn’t repeat itself, but it often rhymes”.