Reserve Bank of Australia Cash Rate Expected to Rise
- The Reserve Bank of Australia cash rate target is widely expected to rise to 4.6 per cent following the Monetary Policy Board meeting concluding on Tuesday.
- The RBA Monetary Policy Board begins its two-day deliberations on Monday afternoon, reviewing briefing papers prepared by bank staff regarding current economic conditions and the broader outlook.
- The nine members comprising the Monetary Policy Board include RBA Governor and Chair Michele Bullock, Deputy Governor and Deputy Chair Andrew Hauser, Commonwealth Treasury Secretary Jenny Wilkinson, and...
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Inside the Reserve Bank Board Meeting and Decision Process
The Reserve Bank of Australia cash rate target is widely expected to rise to 4.6 per cent following the Monetary Policy Board meeting concluding on Tuesday. Financial markets price the probability of a rate hike at roughly 90 per cent, while all 29 economists surveyed by Bloomberg predict a standard 25-basis-point increase. If enacted, this move would lift the cash rate from its current 4.35 per cent to the highest level since November 2011, directly increasing borrowing costs for mortgage holders across the country.
Inside the Reserve Bank Board Meeting and Decision Process
The RBA Monetary Policy Board begins its two-day deliberations on Monday afternoon, reviewing briefing papers prepared by bank staff regarding current economic conditions and the broader outlook. Board members do not receive a full updated economic forecast at this gathering, as comprehensive forecasting occurs quarterly in the Statement on Monetary Policy. Following overnight review, the nine board members reconvene Tuesday morning to discuss policy options and cast their votes.
The nine members comprising the Monetary Policy Board include RBA Governor and Chair Michele Bullock, Deputy Governor and Deputy Chair Andrew Hauser, Commonwealth Treasury Secretary Jenny Wilkinson, and external board members Marnie Baker, Melinda Cilento, Renée Fry-McKibbin, Carolyn Hewson, Bruce Preston, and Iain Ross. Following the vote, the bank releases a short statement at 2:30 p.m. AEST detailing the decision and vote tally without individual attributions. Governor Bullock then hosts a press conference at 3:30 p.m. to explain the rationale and share her outlook on the economy.
Economist Consensus and Market Predictions for Further Rate Hikes
All four major Australian banks—Commonwealth Bank of Australia, Westpac, National Australia Bank, and ANZ—along with every surveyed analyst in the Bloomberg poll, anticipate a rate increase. However, views diverge regarding the path of monetary policy beyond September. AMP chief economist Shane Oliver suggests that while the central bank may issue cautionary language regarding persistent inflation pressures, slowing economic indicators will likely halt further increases.
Given that signs of a slowing economy, declining property values, a weaker labor market, and growing recession concerns will likely become more apparent by the November gathering, we believe a second rate increase—let alone a third—will prove unnecessary.
Shane Oliver, AMP Chief Economist
In contrast to the broader consensus that September marks the final hike of the cycle, money markets price in an aggressive trajectory. Traders currently estimate at least two more increases, establishing better than a 50 per cent probability of a third move that would push the cash rate above 5 per cent by mid-2027. Among major lenders, only ANZ officially forecasts a rate rise in November, aligning more closely with the aggressive pricing seen in debt markets.
Mortgage Impacts and Commercial Bank Response
Commercial lenders have already begun adjusting loan products ahead of the central bank’s announcement. Macquarie Bank increased its fixed mortgage rates by up to 0.2 of a percentage point, marking its second fixed-rate adjustment in a three-week span. RBA leadership has defended the tightening cycle by characterizing the ongoing adjustments as an effort to return borrowing costs to what the central bank considers a more sensible level.
