Australia’s RBA Hike Seen as Near-Certain This Month, With a Pause Favored Afterward

According to Jin10, Goldman Sachs, Marex, JPMorgan, TD Securities, AMP Capital, Royal Bank of Canada (RBC), Rabobank, and Brown Brothers Harriman expect the Reserve Bank of Australia (RBA) to raise rates this month, while Deutsche Bank expects it to hold rates steady. Goldman Sachs expects the cash rate to rise to 4.85% and described recent RBA officials’ remarks as clearly hawkish. Marex said policymakers would likely hold rates afterward to assess the effects of this year’s hikes rather than push through a sixth increase. JPMorgan said inflation remained uncontrolled and further work was needed; weak economic activity made another hike after November unlikely, though high inflation would keep the RBA’s stance restrictive. TD Securities said the latest CPI data had cleared the way for another hike, but a move to 4.85% this month could end the current hiking cycle. AMP Capital expects this to be the fifth hike this year, saying a decision not to raise rates could damage the RBA’s credibility and entrench higher inflation expectations, while this month’s increase should allow a pause afterward. RBC cited recent RBA comments and concerning CPI details, including elevated core inflation and renewed increases in key services prices after volatile items were excluded, saying a hold would be a surprise. Rabobank pointed to stronger-than-expected inflation and hawkish policymaker remarks. Brown Brothers Harriman said the latest inflation data exceeded expectations, strengthening the case for another hike and supporting the Australian dollar. Deutsche Bank expects rates to remain unchanged, saying inflation was in line with the RBA’s previous projections and that waiting for clarity after the U.S. midterm elections, particularly on oil prices, was reasonable. A Reuters poll found that 30 of 32 economists expected the RBA to raise the cash rate to 4.85% on November 3; 27 of 29 expected 4.85% to be the peak this year.