Westpac Sees RBA Hike in November Keeping Australian Inflation Pressures High

The Westpac Bank predicted another increase in the Reserve Bank of Australia (RBA) cash rate in November, keeping economic expectations in Australia on tenterhooks. Yesterday's 25 basis point hike to 4.6% was a unanimous decision. Despite concerns over economic stability, the bank suggests that a follow-up hike next month remains the most likely scenario, contingent upon either an enduring resolution of the conflict in the Middle East or a significant fall in global energy prices. According to Westpac, rising inflation pressures, especially driven by increasing global energy costs, continue to be a crucial factor in RBA monetary policy strategy. A new increase in November would be the base case, with higher barriers for subsequent hikes, indicating that market discussions may shift towards when less aggressive monetary policies will be implemented. Local inflation is still being tested by today's economic data releases, particularly those on commodity energy prices. 'Today’s decision reflects growing inflationary pressures, especially driven by rising global energy costs,' states the Westpac report. The bank notes that a November hike would remain the base case scenario, with higher hurdles for future hikes indicating a potential shift in market focus to when less hawkish monetary policy will be employed.