Interest rates are unlikely to budge at the Reserve Bank of Australia’s October meeting but a final hike before the end of the year remains on the table.
Australia’s central bank has left the official cash rate unchanged at 4.1 per cent for the past three months as it monitors its handiwork so far.
Tuesday afternoon’s meeting will be the first under the leadership of new governor Michele Bullock.
A replacement for her former role as deputy governor has yet to be found heading into the October meeting.
A total of four percentage points of tightening have been delivered since April last year, when interest rates were still at record lows of 0.1 per cent.
A surge in inflation forced the central bank to start hiking interest rates, but the pace of price growth has since been moderating, giving the RBA space to stay on the sidelines.
An uptick in the August consumer price index, particularly strength across services and core measures, has injected some complexity into the inflation battle.
The central bank is widely expected to wait for the full quarterly set of price data later in the month before considering further tightening.
Thirty of 32 economists surveyed by Reuters expect the central bank to stay on hold at the October meeting, with a slender majority then expecting one more hike before the end of the year to take the cash rate to 4.35 per cent.
Economic teams at the big four banks are all tipping a hold in October and NAB is the only bank expecting one more 25 basis point lift in this cycle.
ANZ believes the RBA is on an extended pause but warned the chances of another hike had edged up.
“While much of the lift in inflation reflects volatile items, such as petrol prices, which we think the RBA can look through, there was also a little more inflation in other parts of the basket versus our expectations,” ANZ head of Australian economics Adam Boyton and his colleagues wrote in a note.
The bank’s economists said signs inflation could be running a little higher than expected suggest any move in 2023 or early next year will be more likely a hike than a cut.
