PREVIEW: RBA Rate Decision Scheduled on Tuesday 29th September 2026 at 05:30BST/00:30EDT

RBA is expected to hike the Cash Rate by 25bps to 4.60% on Tuesday. The central bank has remained hawkish after three rate hikes earlier this year. Latest rhetoric and hotter-than-expected inflation support a hike. OVERVIEW: RBA is expected to hike rates when it concludes its 2-day meeting on Tuesday, with money markets fully pricing in the central bank raising the Cash Rate by 25bps to 4.60% from the current level of 4.35%, while all big four banks in Australia are calling for a hike at the meeting.  RBA KEPT RATES UNCHANGED AT THE LAST MEETING AND MAINTAINED A HAWKISH TONE: RBA kept rates unchanged at the previous meeting in August, as widely expected, with the decision made unanimously, while the central bank maintained a hawkish tone as it stated that inflation is still elevated and too high, with risks skewed to the upside, although it noted that financial conditions appear to be somewhat restrictive and it trimmed its CPI forecasts. Furthermore, it noted that inflation is not expected to return to around the midpoint of the target range until late 2027 and that the board remains focused on preventing high inflation from becoming entrenched, but also acknowledged that following three increases in the Cash Rate Target since the start of the year, financial conditions are now tighter than previously and the economy appears to be slowing as expected. Nonetheless, RBA Governor Bullock stuck to the hawkish script during the post-meeting press conference, where she stated the Board hopes to slow the economy, sees upside risks to inflation, and will raise rates again if needed. She also revealed that they did not discuss a rate cut at the meeting, only raise or maintain, and noted the Board is thinking hard about when it might be appropriate to raise rates and that it is possible that they need to hike again.  RECENT RHETORIC REMAINED HAWKISH, WHILE FIRMER-THAN-EXPECTED INFLATION SUPPORTS THE CASE FOR A HIKE: The language from the central bank since then has remained hawkish, with Governor Bullock stating that although growth in the Australian economy is slowing, some of the upside risks to inflation appear to be materialising and noted that lowering inflation is essential, while Assistant Governor Hunter commented that the board is concerned about inflation and has low tolerance, adding that it may have to raise rates if there is a sense inflation will be stronger. Furthermore, the data supports the case for a hike as the latest monthly inflation data showed headline CPI YY was firmer than expected at 3.5% vs. Exp. 3.3% (Prev. 3.8%) and with the RBA’s Preferred Trimmed Mean CPI YY at 3.6% vs. Exp. 3.5% (Prev. 3.6%), which remains above the central bank’s 2-3% target. ANNOUNCEMENT: The rate decision is scheduled for 05:30BST/00:30EDT on Tuesday, and as a hike is widely seen as a forgone conclusion, attention will turn to the statement for clues on future policy and if there are any subtle changes to the central bank’s hawkish tone. Furthermore, RBA Governor Bullock will also be holding a post-meeting press conference, which will begin an hour after the initial rate decision.