The U.S. Fed has raised interest rates for the first time since 2023, adding direct upward pressure on the RBA to follow suit. A weaker AUD makes imports more expensive, driving inflation higher. But the RBA is the RBA. One cannot forget that it held the cash rate steady for 15 months, missing the perfect window to contain inflation. Michele Bullock later had to admit they should have hiked sooner. So how likely is it that the RBA will actually hike in September?
How Likely Will RBA Hike after The Meeting in September
Comments
Inflation is still too high. I expect a split board decision, with most favouring a rise.
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100bps rise should do it
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rookie numbers
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If they are going to kill it, do it fast rather than slow and steady death. Right?
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A basic meal can now cost more than $20, a significant jump from under $12 just a few years ago. Despite the price increase, we are still buying. We need to find a way to bring this under control.
Otherwise, we could face conditions similar to the late 1980s and early 1990s, when interest rates reached around 17 per cent. The RBA had to act to cool the economy, and too much demand can eventually create serious dramatic ending for our economy!
We may need to accept some rate rises now to reduce the risk of much larger increases later. The RBA should consider at least 2 more rate rises this year to help ensure that a $20 meal still costs around $20 by Christmas or the middle of next year, rather than rising to $30.
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Ah yes the basic meal from the basic store, for basic people. Definitely my preferred macroeconomic indicator.
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A poor man and an economist gaze at the full moon. The hungry man contemplates his grocery shopping for his family, considering every promo code and trick to stretch his meagre salary. Meanwhile the economist savours the moon’s beauty and anticipates the next Fed and RBA announcement based on various “indicators” including moon cycle. The poor man cares nothing for these meaningless indicators that have never been accurate and never helped society. He’d rather have multiple rises if it meant his grocery bill was lower. The poor man is me.
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The RBA has almost no control.
Using interest rates to target inflation was an experiment that began in the 90s and has now failed.
There are arguments as to why they never really did have much causal influence, but any control they did have has largely evaporated.
The cohort driving spending and inflation are not at all impacted negatively by interest rates. They have money in the bank earning interest. They have no mortgage so they won't cut back if mortgage rates go up in response to the RBA lifting the cash rate. They are not employed and so their employer cutting back on labour costs to service other expenses is no risk to them.
We have a K shaped economy now.- 1
I might not have all the experience or knowledge that most people do in this market. I’ve noticed that prices have gone up heaps. If the RBA believes they can bring prices down, I’m on board with their strategy. Whether it will actually work is still up in the air.
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It won't. But with simultaneous cuts to migration numbers (i.e. slowing down increasing demand for everything) it may look like it is working.
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@tenpercent: Inflation will soar without immigrant workers coming in. I look around and see they're overrepresented in the workforce as our younger generation is either "lying flat" because it's "too hard and not fair" or they're out there stealing cars and doing home invasions instead of earning an honest living.
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they're out there stealing cars and doing home invasions instead of earning an honest living
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I feel personally attacked. I thought you were describing boomers, but you've described my situation almost exactly and I'm not even 40.
Anyhow I must get back to spending my bank interest and watching the world burn.
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My favorurite part of hike days is when Michelle Bullock steps out from behind the lecturn to reveal her shorts and thongs as she heads off to her holiday home.
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7% (cash rate) here we come
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Will this finally quell inflation? More importantly, will it finally halt the frenzied pursuit of multiple investment properties? The property market has become increasingly reminiscent of a Ponzi scheme with foreign “cash” pouring in to buy properties. Sometimes these foreign individuals send their children to study here and then buy properties to “whiten” their money. We shouldn’t let immigration and property be used by foreigners as money laundering machines. This harms us Aussies who have to pay extra at the grocery.
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Speaking of ponzi schemes, the superannuation scheme (and in turn the Aussie stock market) is basically a ponzi scheme.
It relies on young new people entering the workforce to pay for the old retirees.
As the population gets older (due to dropping birthrates, longer life expectancy etc) there will be more and more retirees and less and less new workers.
At some point, there will be more money leaving the super scheme than entering and then the ponzi scheme will collapse.
The government has been increasing the mandatory contribution % to slow down this effect.
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You have no idea what you're talking about. Superannuation isn't a pension scheme.
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Maybe. But it will reduce your borrowing power or increase your repayments.
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The RBA’s strategy is designed to prevent us from buying too many properties, which could create an artificial boost in wealth and encourage more spending
This also means that first-home buyers might face higher mortgage payments.
It’s not a simple solution.
In fact, it’s a bit of a tough pill to swallow.
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@welcomeUniverseWorld: Around one third of Australians own a house (or multiple houses) outright. Another third of us rent. And another third of us are paying off mortgages. Can you guess which group has the most wealth and the greatest spending power? It's the group the RBA will be rewarding if they hike the cash rate. They have some power to play a kind of musical chairs with who is contributing to inflation, but they can't control it like they may have in the past.
The legislation and the economists at the RBA haven't caught up to the current demographic reality of the Australian economy.- 1
@tenpercent: Yeah.. I know it will hurt me somewhat. I am putting my whole super into Bitcoin again on Oct 8-10th. And, if interest rate continues higher throughout the world, I do not expect similar rise like it did in previous cycles. So, I am affected.
However, I am also affected on my everyday living. I honestly do not understand economics. So, I am not sure what needs to happen to curtail the inflations
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putting my whole super into Bitcoin again on Oct 8-10th
That's incredibly specific. Why not DCA back in? Why not diversify a bit if you accept that is a real risk? There are other ways liquidity injection (which can help drive btc price) can be achieved while maintaining interest rates high; stimmies for example which I expect will increase as more and more people become permanently unemployable due to AI and robotics.
I am not sure what needs to happen to curtail the inflations
More competition, fewer monopolies and duopolies. Less dependence on foreign oil. Subsidised (by the rest of the world) access to our own natural resources and a greater public share in the wealth generated by those resources. More manageable population growth (all the relevant parties seem to be coming around to that now). Less red/blue/black/green tape for housing construction and for business competition. Better incentives and reduced disincentives for people to be more productive. Greater focus on standard of living and quality of life. Less government waste. Not much the RBA can do.
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@tenpercent: “Why not DCA back in?”
I have a rather foolish idea. I’m not competent enough to make the best financial decisions. Even Newton couldn’t. Who am I to think I’m better? So I reject all traditional methods and have done so in the last 2.5 cycles. I try to time my investments based on an approximate Bitcoin cycle, which might or might not work. Then I go all in and put it all into my hardware wallet, trying to forget about it. If it works, sweet!. If not, I imagine I’ll likely be dead by retirement age. So what’s the difference?
I know nothing I’ve said makes any sense. Then again, the smart people who make sense are the 98% of smart people on the market who have always somehow lost to the market. I’d rather be the dumb one. The dates are October 8-10. I’ve already contacted my OTC desk and they’ll buy for me regardless of the interest rate, price or situation.
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my OTC desk
Why not just put in an order via an ordinary exchange? Is that cheaper? By how much?
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@tenpercent: :)
It’s not just about the price difference. It’s about having a set price and getting Bitcoins straight into my wallet while I’m moving the money.
The best part is the fantastic customer service.
I get almost no slippage, enhanced privacy (my wallets are hardly ever get targetted … so less chance of getting into bad issues) and volume discount are also pretty good. I can also negotiate with the OTC depending on the volume. They take care of the buying (whether it’s DCA/TWAP or their other way) and I get my coins while they get dollars. They just do the work.
Plus, I get clear KYC/legal documents that help my SMSF tax accountants. But honestly, I’m pretty sure it wouldn’t really matter if I did it myself since everything is already on the blockchain.
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@tenpercent: I also get to speak with the OTC desk person… And if you get to know him better and make a good friendship, you might find both of you discussing the market more often than you think, giving you another friend to shoot the stars on Bitcoin.
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The question is, will the banks all pass it on via savings rate increases or blame surcharges/interchange fee drops somehow ? Only the banks could find a way to make more money than they lost by a forced reduction of an interchange fee
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To be frank, the US probably raised rates to get the jump on an expected and inevitable Japanese rate rise this week. If they didn't then the carry trade would hammer them hard.
The war is just a cover story for the financial wreck in the back rooms.
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It's looking very likely we'll get a hike end of this month. Odds on November still showing a hold more likely, but all depends on data coming out and what Orange man does.
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One cannot forget that it held the cash rate steady for 15 months, missing the perfect window to contain inflation.
That wouldn't have contained inflation, we would have seen the same impact from the Iran war. You can't have oil prices jump 40% and not have inflation, supply-side shocks like that are unavoidably bad for everyone. Inflation is global and we are part of the global market - interest rates wouldn't have kept prices down on fuel and imports.
And why should they have raised it during that time? Target inflation is 2-3% and we sat in or near that band for most of 2025, it's only Q4 that ran hot and they increased rates in the first meeting of 2026 as a result.
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Not quite true, you haven't considered that a central bank must follow the narrative of raising rates to follow through on high inflation and rising Gov bond yields. If they don't then they lose credibility and bond yields could soar as the market now believes the situation is now unhinged and artificial.
That is the biggest reason the US feds did it, they held on too long due to pressure from the Gov.
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What's not true about what I said? The RBA raised rates in reaction to inflation increasing outside the 2-3% range. Q4 2025 had it go above 3% so they raised it in the first meeting after that. Nothing they could have done would have contained the inflation we're seeing now and they have maintained respectability.
Trump is clearly an idiot whose entire world revolves around cheap credit for his mates, without giving a shit about what inflation does to the masses. But I'm not sure what that has to do with the RBA.
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Because you're only considering the rate decision based on inflation. You haven't considered external factors like the market expectations (ie Bonds).
Also regarding Trump, read my comment below. Everything isn't as it appears. He is an idiot but the time bomb was already in place, Bessent didn't make aggressive comments on it a few weeks back for no reason.
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@plmko: How does the bond rate factor in though? If the bond rate is high because inflation is high then the fed should act on inflation.
I was still talking about Australia though, you seem pretty intent on focusing on the US - which is irrelevant because they're just screwing their entire economy. In Australia the bond rate has generally followed the expectations of what the RBA will do, which is based on inflation. Just because the bond rate follows the RBA rate which follows inflation doesn't mean the RBA should react to the bond rate, just that the bond rate is reflective of inflation.
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- It Allowed Sticky Inflation to Become Entrenched
By keeping rates steady instead of implementing further necessary hikes, the RBA missed a critical window to fully extinguish persistent inflationary pressures. While headline numbers temporarily dipped, core inflation remained deeply entrenched, driven by structural items like rent, insurance, and services. - It Forced a Destructive Policy
Because the RBA did not tighten enough during that 15-month window, the subsequent rate cuts they finally delivered in mid-2025 proved to be premature. As domestic price pressures and inflation rebounded in late 2025, the central bank was forced into a painful u-turn, rapidly hiking rates again. This sudden shift eroded public confidence and caught households off-guard. - It Kept Interest Rates "Higher for Longer"
Economists argue that a sharper, more aggressive tightening cycle during that 15-month period would have cooled the economy faster. By dragging out the pause, the RBA ultimately prolonged the economic pain, forcing interest rates to stay restrictive for a much longer period. - Divergence from Global Peers.
While other major central banks moved deliberately to break the back of inflation, the RBA's prolonged pause was viewed by some as overly cautious. This hesitation eventually left Australia behind the global curve, grappling with an inflation problem that required fresh rate hikes while other nations began stabilising.
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It Allowed Sticky Inflation to Become Entrenched
There was no sticky inflation though. Look back to June 2025, annualised inflation was 2.1%, housing had gone up 2% yoy, insurance was up 3.1% (which wasn't significantly high). There was no reason to suspect inflation would go up.
If your argument requires rewriting history just to work, it's not a good argument. There's a good argument that the RBA should have increase rates in Q4 2025, however there wasn't really that much data to support either way. No one else was raising rates then either.
Because the RBA did not tighten enough during that 15-month window, the subsequent rate cuts they finally delivered in mid-2025 proved to be premature
That sentence makes no sense. The rate cuts were during that 15 month window because inflation was low, are you arguing they should have increased rates to try tank the economy?
While other major central banks moved deliberately to break the back of inflation, the RBA's prolonged pause was viewed by some as overly cautious. This hesitation eventually left Australia behind the global curve, grappling with an inflation problem that required fresh rate hikes while other nations began stabilising.
Rubbish, everyone is raising rates at the moment. New Zealand just increased rates, the EU is expected to raise rates, Japan has raised rates, the US has raised rates.
Your whole post sounds like you asked AI to explain why the RBA should have cut rates during that 15-month period and it generated an answer to your question. However what it misses entirely is that your premise has a bunch of flaws.
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@freefall101: Oh absolutely. Let's forget Michele Bullock's reflections, forget the RBA's internal reviews, forget the entire economics profession. Clearly you have cracked the code. Honestly, Anthony Albanese should've skipped the whole appointment process and just handed you the keys to the RBA. Why rely on decades of monetary policy experience when we've got someone who can spot "flaws" in a premise from a single post?
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@nned2say: What are you on about?
The flaws are in your post, you posted a bunch of things that are factually wrong, and using those premises that were wrong you kept steamrolling ahead that the RBA should have lowered rates when there was no reason to.
That and you seem willfully blind to rates being raised elsewhere in the world right now, due to the inflation caused by fuel prices and not this mythical 15 month window of sticky inflation.
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- It Allowed Sticky Inflation to Become Entrenched
Not easy under Albanese makes sense now
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I can't believe
Dan's/Albanese's invasion of Iran, and his creation of RAM supply issue has hurt the economy. Why hasn't he done more to control other countries' leaders and businesses????- 8
Excessive government spending is causing inflation too and the huge debt being racked up doesn’t help
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Then I'm sure you'd be a fan of the government slurping money out of the economy by killing the CGT discount, right?
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Very likely they will increase.
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Market has already priced in a hike for Sep, and most likely another in/by December:
https://www.asx.com.au/markets/trade-our-derivatives-market/…
And another one in first half of 2027.
(i.e. 3 more hikes this cycle, including one in Sep)
If you disagree, then you should be betting against it.
Also, if US keeps hiking, then Australia is kinda forced to follow. If the spread is too wide, A$ will suffer (because people will be selling A$ to buy US$ to buy bonds in US$ because you'll get a better rate).
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Market is as easily as flip to lowering rate. They just like to go with the herd consensus.
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RBA raised the rate to 4.6%. Inflation figure coming tomorrow and we'll see whether we might have another rise later this year.
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Oy Vey the government has blocked that site.
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That's not polymarket. Apparently Australians are only allowed to lose their money to gambling if the gambling companies have donated millions to the Labor party.
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AusBlock
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To the moon baby. Savers have suffered for far too long while indebted people in the mortgage belt drive around in their flash new 4wds on cheap credit.
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That sort of sums it up.
The banks have a freehand to load up everyone with debt, then reward themselves with rate increases by the inflation they cause.
Inflation was once driven by Supply /Demand. Now its Desire/Need.
The fuel price is supply side and no amount of Interest rate is going to influence that, other than by strangulating the economy further
It's not science at all.
I don't know the answer but choking the banks ability to invent money through loans might be an economic approach.
So instead of "sure you can borrow money but it will cost more"
how about "Sure you can borrow money but not as much" by tools like LVR's,
And that could stem the actual inflation markets, Except Government Spending- 1
Chalmers and Albo trying to escape the blame already as if their govt spending spree or that shit show of a budget wasn't to blame. Tax me more daddy. Top it off with a few more interest rates hikes. While you are it butter me up and **** me as well.
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Look, he doesn't hold an oil tanker on the Strait of Hormuz. Unbelievable he hasn't sorted out the "Iran Conflict" already
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We need a strong PM who will declare they will shirtfront the IRGC and then go over and shake their hands.
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Shirtfront a global energy crisis, that's squarely on an Australian PM's shoulders if you ask me!
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Inflation was rising prior to the start of the war.
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It started under the Morrison Government.
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Totally Albo's fault that fuel was thrown on the fire
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@happydude: Don't know if you recall, maybe your memory is hazy, there was this thing called COVID and people LOST their marbles
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@ThithLord: People still blaming Covid for the current inflation rate have really lost their marbles.
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@ThithLord: Another war locally raging with fraud within NDIS/solar rebates/any other govt funded refund scheme.
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@ThithLord: excuses, excuses, excuses. Funny how it's never Labour's fault. I reckon they must be really unlucky, and as superstitious as I am, I'll never vote for them.
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@ThithLord: The immaturity in your position is your focus on matters the government has no control over, when I am wanting the government do everything within it's control. On that measure it's a joke.
They could have done a lot, instead they did nothing. Addicted to spending and immigration, worst productivity since records began, and a PM that is happy to lie.
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A large part of our inflation issues are due to excessive amounts of government spending…
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And loosing revenue by cutting the tax on petrol last time.
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@jeffa: Market prices are set globally. Tax the producers at the well head. They can't sell the oil higher than the market price and most of Australian oil production is exported, despite us producing and exporting more than we import. That way the producers pay the tax, rather than the consumers. The nation benefits more from its own resources.
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That's a really good point. Having Trump and Albo simultaneously in power is like the perfect storm.
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Hike x2 left for this year.
Diesel is 3 bucks again, until it’s back at $1.60 it’s going to keep getting hiked.